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Understanding Contract Law Basics

Contracts can cover agreements between parties for goods and services. Contracts can also lay the groundwork for an agreement not to do something.  As long as it is legal to do so, parties can enter into agreements for just about anything. All contracts, however, have some fundamental elements in common.

Contract LawyersContract Law Basics – The Offer

All contracts first require an offer. An offer details a proposed course of action, such as “I will paint the exterior of the building for $5,000,” or “I will provide 600 reams of copy paper if I can use your copier to create my flyers,” or “I won’t build a structure on my land that blocks your view of the ocean in exchange for an easement in the form of the current driveway.”

Contract Basics – Acceptance

Valid contracts require not only an offer, but an acceptance of the offer, as is.  For example, taking our painting example above, if the building owner says, “Okay,” to the offer to paint the exterior of the building for $5,000, there is acceptance.  If, on the other hand, the building owner says, “I only want to pay $4,000” or “I want you to paint the exterior, the stairs, and the parking lot,” this is not acceptance. Instead, this is considered a counteroffer.  

If a counteroffer is made, the process begins again and the party on the receiving end of the counteroffer must now accept the terms. This can go back and forth until both parties come to an agreement and an offer is accepted.

Contract Basics – Consideration

Consideration is a legal term which means “something of value.” In our examples above, the consideration includes $5,000, 600 reams of copy paper, and an agreement not to block the neighbor’s view. While money is certainly something of value, it is not the only thing legally considered valuable. As long as the consideration is something of value, it likely meets the requirements for a valid contract.  

Contract Basics – Written Versus Verbal Contracts

Certain types of contracts may be oral rather than written. However, most lawyers agree that all parties are better served by a written contract. Reducing agreements to writing provides the following assurances:

  • Proof that an agreement was made
  • Words that establish the intent of the parties
  • Limitations to the agreement

Proving a conversation took place, or the nature and extent of the conversation, can be difficult. By reducing the agreement to writing the parties save time and money in the long run. For example, the parties could save on legal fees saved not having to litigate a dispute about what the agreement encompassed or whether an agreement existed at all.

Additionally, there are certain types of contracts that must be in writing, including but not limited to the following:

  • Sale or transfer of land
  • Contracts requiring more than a year to complete
  • Contracts regarding the sale of goods more than $500 – which is subject to the Uniform Commercial Code

Contracts – From Drafting to Enforcing

From your cell phone provider to your vendors, contracts are put into place and relied upon every day in business. As you consider entering into agreements with vendors, subcontractors, and third parties, consider hiring an experienced attorney to draft your contracts and review the contracts of others. When a party isn’t upholding their end of a bargain, an attorney can assist you in enforcing the contract previously entered into.

At Portuondo Law Firm, we offer business law services.  This means not only can we draft contracts for you, we can review the contracts others ask you to sign. Additionally, we provide legal assistance in interpreting contracts, determining legality, enforceability, and scope. Contact us today for comprehensive business law and consultation. We look forward to working with you.

 

 

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Portuondo Law Firm

Portuondo Law Firm provides custom services to South Florida businesses and residents. The Firm provides the personalized experience only a boutique firm can, without sacrificing quality.

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