Most business owners aren’t experts in the legal world, which is why it’s important to hire a reliable attorney. Anytime you are dealing with a legal contract, the margin for error is very slim. Knowing the difference between what constitutes a legally binding agreement and what doesn’t can be very valuable. That’s why we’ve created the following article to provide you details about 4 components of a legal contract. These are 4 general guidelines for a legitimate contract, but remember that you should always review any contracts with an expert business attorney before signing off on them. Reach out to Derryberry & Associates LLP if you are in need of a professional contract review.
The offer is the first component of a legal contract. It details a specific offer for one of the parties to do something. There will typically be a timeframe for the terms of the contract that must be adhered to. An offer needs to be specific and precise so that the terms are never left up to question. Things like estimates, proposals, or letters of intent are not considered to be an offer. There is usually a time limit for the other party to accept the offer. If the contract isn’t accepted by that time, it is usually considered null and void.
This is another important component of a legal contract. After the offer has been submitted, the other party can accept it. The terms and conditions that were detailed in the offer will be exactly what is accepted. If one party isn’t happy with the terms of the offer, they might submit a counteroffer that is more to their liking. Keep in mind that a contract can be accepted verbally, in written form, or inferred by an action that clearly constitutes acceptance. Make sure you fully understand an offer before you accept it. If you need an expert attorney to take a look at a legal contract for you, reach out to Derryberry & Associates LLP.
The final component of a legal contract we will discuss is known as consideration. It essentially means that the contract is legitimate because both parties understand an exchange of value will take place. It’s typically accepted as a monetary value, but there are certain exceptions depending on the type of contract.
4. Legal Consequences
Contracts are legally binding documents, so it makes sense that you would want to include any legal consequences of not adhering to the contract. Both parties will need to acknowledge that they understand the consequences of failing to comply with their contractual duties. This is one of the reasons why drafting a contract the right way is so important. Without clearly detailing the legal consequences in your contract, you might be facing huge liabilities.
Now that you know the 4 legal components to a contract, you will be much more prepared for success on your next contractual arrangement. Remember that you can always reach out to Derryberry & Associates LLP for help with your business contracts.