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The 5 basic elements of a business contract

On Behalf of | Jun 15, 2023 | Civil Litigation

Contacts are an essential element of virtually every industry. Without a contract, you cannot know exactly where you stand with your customers, vendors, and other parties and what to do if something goes wrong. But an incomplete, vague or poorly written contract is not much help either. Misunderstandings among the parties because of flaws in the contract can create problems, not prevent or solve them.

What must be in your contract to make it a contract

A contract does not have to be overly complex, but there are certain things that every contract must contain to be useful, valid and legally enforceable. At its core, a contract must include:

  • The intent of all the parties involved to make a contract.
  • An offer from one party
  • Acceptance of that offer from the other party
  • An exchange of consideration for what was offered
  • Legal subject matter (a contract to commit a crime is unenforceable)

Technically, courts do not require that a contract be written down. But it can be very difficult to prove that a verbal (unwritten) contract existed and that the other party breached it.

Beyond these elements and the parties’ signatures are things that help make the contract the strongest it can be. It’s important to balance detail with clarity. The contract should discuss every element of the agreement and each party’s rights and obligations. At the same time, the text should use plain language and be as easy to read as possible. Every party should be able to read the contract and understand its contents.

How a lawyer can help you with your contracts

A solid contract tends to protect businesses from almost any conceivable dispute and potential litigation. But a lawsuit can still arise, and when it does, experienced legal representation is crucial to reaching a reasonable outcome.