A contract is an essential legal document that ensures a clear understanding between two different parties. Contracts are used frequently with businesses, whether in forming a partnership, hiring an employee, or another agreement. While one would assume that every contract presented is enforceable, that is not the case.
The following conditions need to be met for a contract to be valid.
Parties' Awareness of the Agreement
Verbal contracts are not uncommon but are extremely difficult to enforce if not later solidified by a physical contract. When a contract is made, both parties must acknowledge the agreement and that they are both bound to the contract.
Another example of awareness of the agreement is each party’s representation. If one party is signing the contract under false pretenses, fraud, or misrepresentation, the contract would not be considered valid.
The contract should clearly state the offer being presented from one party to the other party. There may be some conditions that come with the offer.
Longevity of the Offer
Some offers may only be accepted until a certain reasonable time. The term reasonable is open to interpretation; however, depending on the type of business and the contract, both parties should agree on the amount of time the offer is valid.
Some contracts may have information regarding the opportunity for a counteroffer while others won’t. Doing this without proper preparation or representation could be costly as there is no guarantee that the other party will accept the counteroffer.
If one party does not accept the contract terms, they may revoke the contract and there is no binding agreement between the parties.
Exchange of Value
This is a third essential element of a contract. For example, if an employer is offering an employee a job, the exchange of value would be the compensation the employee would receive. The agreeing party should read this section carefully prior to agreeing to the contract.
Questions About a Business Contract?
A contract could have statements in it that may be difficult to comprehend. That’s why before potentially getting out of a contract, it’s critical to know whether the contract you signed is enforceable or valid. The experienced contract law attorneys at Purdy & Bailey, LLP are ready to look over your case. Read what past clients have said about their experience working with us and reach out so we can help.