The definition of a contract is “a legally-binding promise made between two or more parties.” Those who violate the terms set forth in a contract can be held legally liable for breach of contract and be ordered to pay damages. Courts will uphold legally binding contracts, unless they are against public policy, are otherwise unlawful or were inaccurately drafted or fraudulent.
There are certain elements that must be present for a contract to be legally binding:
Two final elements comprise a legal contract. It must have been made for legal purposes between parties who are legally competent. If either of those are negated, the contract may be rendered unenforceable.
A unilateral contract is one wherein the offeree is required to accept an offer by the performance of the contract. If there is no performance, breach of contract is inapplicable because a contract does not exist.
A bilateral contract is one where the offer is accepted by the offeree with a promise, as when an offeree makes a promise to fulfill a specific obligation at some future point. If this obligation remains unfulfilled, a breach of contract has occurred as the promise alone was the acceptance.
A bare contract is simply a promise made by one individual to another without the element of consideration to make it legally enforceable by the courts.
A fixed price contract specifies an amount of money that shall be given upon completion of a specific project, as when a structure is being built. The fixed price may be firm or adjustable with a specific target price and maximum price.
A cost reimbursement contract is used in lieu of a fixed price contact and is sometimes referred to as a “cost-plus contract.” They are commonly used by individuals, businesses and government entities on building or other projects where materials must be purchased. Its terms specify that the one performing the work, i.e., the contractor must be compensated for said costs which are unknown at the time the contract is drawn up. Additional funds are also promised so that a profit is made as well.
Adhesion contracts make up the bulk of contracts that are signed. These are completely one-sided and considered to be a “take it or leave it” proposal where one side retains all the bargaining power and the other can either sign it or not. Cellphone contracts, rental agreements, documents signed for car purchases all fall into this contractual category.
When one party doesn’t live up to the obligation to perform some action after a valid offer was accepted, a material breach of contract can occur. Actual damages must be suffered in order to pursue a claim in court.
Because there are many complexities and contingencies involved in business contracts, retaining an attorney familiar with the ins and outs of contractual law is recommended.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified business contract lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local business contract attorney to discuss your specific legal situation.