Understanding the critical basics of contracts

On Behalf of Dunlap Fiore, LLC |

Businesses in Louisiana must understand contracts not just to provide the goods and services that are part of their area of expertise, but as a method to protect themselves from legal issues and allegations. Having a grasp of the basics regarding contracts is one of the most understated – and critical – parts of running a business. As always, any business must make certain it is protected under the law by having assistance from a law firm that is well-versed in helping companies and protecting them from allegations of breach of contract and other problems.

When two or more parties agree to do or not to do certain things, it is a contract. This is legally enforceable. The word “party” refers to individuals, companies or other legal entities. There are basic elements in every contract. The parties must be competent to enter into a contract for it to be legal. A mutual agreement must be made by all parties with these agreements stipulating what acts will be performed, what is not required based on the contract or if there are certain acts that a person who is agreeing to the contract will not perform.

Not all contracts must be in writing. However, if it is a real estate deal, goods that are worth more than $500 or contracts that will take at least a year to complete, these should have a written agreement. The written agreement serves as proof that the issues in the contract were agreed upon and it can stop one of the participants from trying to breach the contract. This provides protection and can be evidence in a legal filing if one becomes necessary.

Understanding the Uniform Commercial Code in contracts is wise. Most contracts are common law, but commerce guidelines are covered by UCC. Breaking the contract without a prior agreement to do so is known as a breach. Enforcing the agreement can be accomplished via lawsuit. The size of the financial agreement will dictate whether it will be a small claims court or not. Oftentimes, the disagreement is based on semantics and it can be settled through mediation. No matter the situation, having legal help when dealing with contracts of any kind is vital.

Source: smallbusiness.findlaw.com, “Contracts Basics,” accessed on March 20, 2018