Learning that a deal you negotiated has fallen apart can be devastating. It may be even worse when you realize that you have no recourse because you signed a weak or unenforceable business contract. We strongly urge you to seek advice from your legal representative or corporate counsel before presenting or signing any contract. In this article, we will look at some of the elements of an enforceable business contract.
Contract, Defined
One legal definition of the word “contract” is:
“An agreement between private parties creating mutual obligations enforceable by law.”
The following list is just a few of the business contracts you may encounter:
- Partnership agreements.
- Employment contracts.
- Agreements with vendors and suppliers.
- Commercial leases.
- Contracts to purchase or sell a business.
It’s usually best to memorialize your business agreement in writing. However, some oral contracts are enforceable under Florida law.
Some Fundamental Elements
Certain things must be included to make an enforceable business contract, including:
An offer and an acceptance of that offer. Your company might offer to buy 12,000 widgets from WidgetsRUs for $5,000. They may accept the offer and then provide the widgets in compliance with the terms of the business contract.
Consideration is a payment that one party makes to the party that completed the action required in the contract. In the example given above, the $5,000 purchase price is the consideration.
Capacity or the mental ability to understand the contract and its implications is a necessary part of an enforceable business contract. For example, if the owner of the widget company suffered from dementia, was impaired at the time the contract was signed or was underage, the contract may not be enforceable.
A legal purpose is another element of an enforceable business contract. Any contract that requires the parties to perform illegal activities generally is not enforceable.
Is Your Business Using Enforceable Business Contracts
Contract law is complex. It is not easy to understand the legal terminology or the effects of most contracts. Always discuss contracts with your corporate counsel or a business attorney before signing one yourself.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed tm. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. we represent clients throughout South Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, and surrounding communities.