Creating Business Contracts that are Legally Valid
When running a business, there are many reasons to create contracts. From the start-up phase on, situations will arise where having information in a legally binding format is essential. Contracts create clear terms and provide protection in many situations.
Creating these contracts can be confusing, and, when completed incorrectly, could provide little protection should the need arise. If you’re in a situation where a contract is necessary, perhaps you’ve run an online search. You’ve found a range of examples that are filled with language that you don’t understand; maybe you’re just not sure where to start.
Necessary Elements of Valid Contracts
Before jumping into creating a contract for your business, it’s important to understand the absolute basics that any contract that is legally valid must contain. In this situation, there are two:
- All parties that are included in the contract must be in agreement with the final terms outlined in the contract.
- Something of value must be exchanged for something else that is of value. This could include services, cash, goods or a promise of some sort.
While laws vary from one state to another as to whether contracts must actually be in writing to be valid, it’s always a good idea to take this step. The more protection you can provide for your business, the better. Oral and other arguments can be harder to stand by in most situations.
All Parties Must Be In Agreement
It makes sense: before anyone signs a contract, they must be in agreement with the terms. This is the first necessity of a legally binding and valid contract.
To prove this, the following elements and steps must be taken:
Actual Offer and Acceptance
Before a contract is signed, one party must make an offer that the other party accepts. In many cases, this is first discussed orally. Terms are discussed, then one party puts the terms into writing – this is the creation of the actual contract.
When the other party accepts the offer, the contract is signed and business can move forward. Sometimes, certain terms must be negotiated, sometimes the original party may revoke the offer in full. Because of the variables that exist, a contract is not binding until agreed upon – or accepted – by both/all parties.
Contract Best Practices
To be sure that your business is protected, contracts should be clear and should meet the criteria outlined above. If you’re confused by the process or unsure of where to start, it’s always a good idea to meet with an experienced business law attorney like Michael Hynum with Hynum Law. We can work with you to ensure that your business is protected in all endeavors and that your contracts are legally valid.
Set up a consultation today to get started; we look forward to working with you.