If you’re starting a business with someone, renting property, or hiring an employee, you are entering into an agreement with them, but at what point does an agreement become a legally binding contract? Does a contract have to be written by an attorney? To help you better understand your rights and make sure you can protect your interests, we’re sharing what you need to know related to business contracts.
What Is a Business Contract?
At its most basic, a contract is a written or spoken agreement or promise. In order for a contract to be valid, there have to be specific elements present.
- There must be an offer and an acceptance of the offer, such as signing a lease or accepting a job
- A consideration, something of value, must be exchanged. For example, with a lease, one party is exchanging money for the right to live in someone’s property
- Both parties are legally competent and consent to the contract. This means that a contract can’t be with a minor or someone who doesn’t understand the contract, such as someone with serious dementia or certain levels of cognitive disability
- The contract must be regarding a legal activity and enforceable by law. If the contract involves committing an illegal act, such as providing someone with a set percentage of profits from drug trafficking, the contract is not valid
Oral vs Written Business Contracts
It’s a common belief that for a business contract to be legally binding, it must be in writing, but this is not necessarily the case. A contract can be spoken as long as the basic elements listed above are present. For example, a job offer and acceptance can be spoken and it’s still considered lawful and enforceable.
The concern with oral contracts is that they can be difficult to prove and there is a higher likelihood of miscommunication. If one party does not hold up to the contract, and there is no evidence of the terms of the contract, there is often not much the wronged party can do. On the other hand, a written contract is clear and definite, and there is no need for both parties to remember the terms or have additional evidence.
Why You Need a Business Contract Lawyer
If you’re asking whether you need a lawyer to draft a contract, legally, the answer is no. Anyone can draft a contract on their own and as long as the elements above are included and both parties are legally competent and consent to the agreement, it is generally lawful. However, lawful and legally binding may be two different things. For example, having an employee sign a non-compete clause is legal, but in most states, they don’t hold up in court.
When you have a serious issue that requires a business contract, you want to protect your interests and cover your bases. A business contract attorney has the knowledge and experience to draft a contract that is lawful, legally binding, and also free of loopholes. They will sit down with you and discuss what you need and what your goals are for the contract and draft a document that meets those goals.
If you are presented with a business contract to sign, it’s just as important to have a contract attorney review it to make sure signing it is in your best interests. They can provide you with the guidance you need to make the right decisions for the future.
Schedule a Consultation with a Business Law Attorney in Raleigh Today
On the surface, business contracts may seem simple, but it’s important to not draft or enter into a business contract without consulting with an experienced business lawyer. At Kirk, Kirk, Howell, Cutler, & Thomas, LLP, we can assist you with sales contracts, employment agreements, real estate and lease agreements, and other business contracts. Schedule a consultation at 919-615-2473 or fill out the form below to schedule a consultation today.
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