As a business litigation attorney, the majority of my lawsuits are over breaches of contract.
While I never recommend drafting or signing a contract without consulting a lawyer, I wanted to explain a few basic contract terms.
For a contract to be valid, it must meet these criteria:
- Mutual agreement: everyone in the contract must agree to the terms of the contract. If the contract calls for payment in January and one party thought January 2019 and the other thought 2020, then there is not mutual agreement.
- Consideration: All parties must give something and receive something. Valid consideration is $2000 for painting my house. Invalid consideration is “You promise to paint my house.” Each side must have a reason to perform under the contract.
- Competent parties: Every party entering into a contract must have the capacity to understand its terms and consequences. Someone under the age of 18 and someone lacking the mental capacity to understand a contract is not considered a competent person.
- A mutual obligation to perform: All parties have certain obligations to one another they must fulfill. Using the above painting analogy, a timeframe to paint the house and a timeframe to tender payment must be included.
- Proper subject matter: The contract must be regarding a legal activity. Contracts for illegal activities will not be enforced.
Mutual right to remedy: All parties have an equal right to remedy upon any breach of terms by the other party.
Thank you for reading, my business is to protect your business!
Watch the video above to learn more.