A legal contract is any agreement that is enforceable under contract laws. Most legal contracts are written and signed, although some jurisdictions recognize oral agreements as legal contracts. It’s generally best for a contract to be formalized in writing, especially for very valuable subject matters or for complex arrangements.
Legal contracts can be used by both individuals as well as organizations such as businesses and corporations. Any legal contract needs to be entered into in a way that is fair for both parties, and free of any fraud, coercion, or misrepresentations.
In order for a contract to be valid, it needs to fulfill the requirements for a valid contract. These requirements are set forth by state and federal laws. A legal contract should meet the following requirements:
- Offer/Acceptance: One party needs to make an offer, and the other needs to accept the offer. Both offer and acceptance need to be done in a way that is clear and unambiguous.
- Assent: Both parties must mutually assent (agree) to the terms of the contract. They should be clear as to the terms, words, and definitions used in the agreement
- Consideration: Each party needs to exchange something of value. For instance, one party is usually providing service or goods in exchange for monetary payment.
Also, some contracts must be in writing in order to be legal. Examples of these include contracts for the sale of real property, and contracts for the sale of goods worth over a certain amount (usually if it’s over $500, it needs to be in writing).
If a contract is not valid, it can have some major effects on both parties. There are many reasons why a contract can be invalidated. The main reason is if one of the requirements listed above wasn’t met. For instance, if only one party assented to the agreement, the contract is not legally binding.
Depending on the circumstances, a court can often declare a contract void. This means that the contract is cancelled as if it never existed. The parties might then be released from their duties. In other cases, the court may declare the contract “voidable,” meaning that the parties can cancel the contract at their own election. The difference between void versus voidable contracts is highly technical and may require the help of a lawyer.
A breach of a legal contract is considered a legal violation. If one party fails to fulfill their contractual duties, a lawsuit will usually result between the two parties. The non-breaching party will typically sue the other party for any damages caused by the breach of contract.
Alternatively, the court can issue an injunction requiring the breaching party to fulfill their contract obligations (such as delivering a shipment of goods). The choice of remedies in a contract case can vary depending on the type of breach and the type of legal contract involved.
Having a legal contract is an essential way to protect yourself during any type of agreement or transaction. Before you sign any agreement, it’s important that you understand how legal contracts work. You may wish to hire a business lawyer if you need help with a legal contract, or if you need to file a lawsuit. Your attorney can provide you with the legal services needed for your situation.