A construction project in Louisiana involves many entities, including the commercial property owner, the contractor, various subcontractors, and even financial institutions if the property owner took out a loan to purchase the premises. All these entities have one thing in common: they likely entered into a contract in the process of executing the construction project. Therefore, it is important to understand exactly what it takes to form a legally-binding and enforceable contract.
First, to execute a contract an offer must be made. Offers must be unambiguous, and the party making it must have the reasonable expectation that the other party will agree to abide by the terms of the proposed deal. Second, the offer must be accepted, which means the other party must unambiguously express that they agree to perform the terms of the offer. Third, consideration must be negotiated and exchanged. Consideration is simply something of value that the parties to the contract will exchange in order to benefit from the deal.
For example, an offer may be made wherein goods or labor might be exchanged for money. One party benefits from obtaining the desired goods or having the project completed while the other party benefits from being paid. If there is a clear acceptance of the offer, then a contract may be formed.
This is only a basic overview of contract formation. Construction contracts can often be quite complex, and there are a variety of types of contracts that businesses might enter into. For example, a contract may be bilateral or unilateral, or a contract might be express or implied. Therefore, before making an offer, accepting an offer, or exchanging consideration, the parties to a proposed agreement will want to make sure they both have a common understanding of what the agreement will bind them to before proceeding. Business law professionals understand what it takes to execute a contract and can make sure their client’s best interests are protected.