Business of all sizes in Louisiana and elsewhere enter contracts in the normal course of business. Whether these are simple contracts, employment contracts, vendor agreements or major sale contracts, a business contract can have many layers to it, making it important that all parties to the agreement understand what they are agreeing to. Taking such a step could help the parties avoid a contract dispute or help them better navigate a resolution if one ensues.
For those running a business, a business contract is the most common legal transaction that will occur. No matter what type of business it is or the size of the company, the key to creating a sound business agreement is ensuring that it is legally enforceable.
In order to verify that a business contract is a legally enforceable agreement, there are certain components that must exist. And in the eyes of a law, a contract is not created until there is an offer and acceptance along with sufficient consideration. These three things make a valid contract.
With regards to an offer, this is when a person or a business makes an offer with the expectation that they will be bound by the terms of the offer if the other party accepts it. The terms of an offer must be definite and certain. An acceptance, on the other hand, is when there is a clear expression of the accepting party’s agreement to the terms of the offer. Lastly, consideration is a bargained-for exchange between the parties. This is when something of value passes from one party to the other, which means that each party of the contract will gain some benefit from the agreement while also incurring some obligation in exchange for that benefit.
Disputes often occur when a contract was not validly created, a party failed to perform under the terms of the contract or something else occurred that resulted in damage or harm to the a party or parties of the contract.
When contract disputes ensue, it is important to understand ways to resolve and remedy these disputes. This might be by enforcing a contract or collecting damages. Those dealing with a contract dispute should take the time to understand how to best resolve the dispute while keeping the best interest of the business in mind.
Source: Findlaw.com, “Contracts and the Law,” accessed Sept. 17, 2016