Due to the convoluted and complex legal language used in business contracts, they are often perceived as difficult to understand. If you’re entering a business transaction with a business partner, other person, or entity, it’s likely you’ll need to draft a contract. The basic foundation behind every contract is writing it in a way that makes the contract legally valid. In this blog, we discuss the two elements a legally valid contract requires.
The Parties Must Have a General Agreement
This is perhaps the most obvious requirement in determining the legal validity of a contract. It is essential that all parties agree on the contract’s major issues. While it’s naïve to think that every party will be in complete agreement over every detail of the agreement, there are rules in place to help define when an agreement legally exists. If someone accepts an offer that’s been put on the table, that can be considered an agreement. An acceptance can be done orally or in writing, but it’s recommended that all transactions are done in writing. Should there be a discrepancy in the business agreement or contract, it is very difficult to prove the validity of an oral agreement.
Exchange of Things of Value
A contract isn’t considered legally valid unless there is an exchange of something of value between both parties. The “thing of value” that is exchanged can be a promise of payment or a promise that a future job will be completed in the time specified by the contract. It’s important to note, however, that acts of generosity or one-sided promises are not enforceable by law – if you are given something and not asked to give something back in return, there is no exchange of something of value, and therefore no contract.
Whether you’re a new business owner looking to launch a company or a seasoned professional looking to expand, our Chicago business lawyers at The Prinz Law Firm can help! Call us today at (312) 212-4450 or contact us online to schedule a free consultation.