Legal Contracts

A legal contract is an agreement which is enforceable under contract laws. The majority of legal contracts are written and signed.

In some jurisdictions, oral agreements may also be recognized as legal contracts. It is, in general, best for a contract to be formalized in writing, especially if the subject matter is valuable or governs a complex arrangement.

A legal contract may be used by both individuals and organizations including businesses and corporations. Any legal contract hsa to be entered into in such a way that is fair for both parties as is free from:

• Fraud;
• Coercion; or
• Misrepresentations.

What are the Requirements for a Legal Contract?

In order for a contract to be considered valid, it has to fulfill all of the legal requirements for a valid contract which are set forth by both state laws and federal laws. Legal contracts should meet the following requirements:

• Offer and acceptance: One party needs to make an offer, and the other needs to accept the offer;
  • Both offer and acceptance need to be done in a way that is clear and unambiguous;
• Assent: Both parties to a contract must mutually assent, or agree, to the terms of that contract. They should be clear as to the terms, words, and definitions used in the agreement; and
• Consideration: Each party is required to exchange something of value. For example, one party is usually providing service or goods in exchange for monetary payment.

In addition, some types of contracts must be in writing in order to be legal. Examples of these include contracts for the sale of real property as well as contracts for the sale of goods worth over a certain amount, typically over $500.

What are the Different Types of Contracts?

There are several different types of contracts that an individual or business may encounter or use. Two main categories of contracts are unilateral and bilateral.

Unilateral contracts involve promises or exchanges for a specific performance. Bilateral contracts involve a promise in exchange for another promise.

Other common types of contracts include:

• Express contracts: These contracts typically specify orally or in writing the exact terms of the contract;
• Conditional contracts: These contracts are based upon a completion of a condition;
• Joint and several contracts: These contracts involve multiple parties;
• Implied contracts: These contracts apply when a court finds that a contract exists based on the situation;
• Unconscionable contracts: These contracts put one party at a greater advantage than another one and are considered unjust;
• Adhesion contracts: These contracts are considered to give one party more bargaining power than another and therefore result in a take it or leave it type of situation;
• Option contracts: These contracts allow an individual to enter into another contract with another party at a later time; and
• Fixed prices contracts: These contracts involve a buyer and a seller who both agree to pay a fixed price for a project.

It is important to keep note that contracts may come in all forms and are something that most individuals encounter every day. If an individual is unsure what type of contract they are in, it may be helpful to consult with a local attorney to find out more information regarding their situation.

What if a Contract is not Valid?

If it is determined that a contract is not valid, it may have a major effect on all parties involved. There are numerous reasons why a contract may be invalidated.

One of the main reasons is when one of the requirements listed in the contract is not met. For example, if only one party assented to an agreement, the contract is not legally binding.

Depending upon the circumstances, a court may declare a contract void. This means that the contract is called as though it never existed.

The parts to the contract may then be released from their duties. In other cases, a court may declare a contract voidable, which means that the parties may cancel the contract at their own election.

The difference between a void versus voidable contract is highly technical and may require the assistance of a lawyer to fully comprehend.

What is a Breach of Contract?

A breach of contract occurs when one of the parties fails to fulfill their contractual obligations. If a breach occurs, a lawsuit may result between the parties.

The non-breaching party can sue the other party for damages which were caused by the breach of contact. In the alternative, a court may issue an injunction that requires the breaching party to fulfill their contractual obligations, such as delivering a shipment of goods.

The choice of remedies in a contract case may vary depending upon the type of breach and the type of legal contract that was involved.

What are the Ways You can Breach a Contract?

There are three main ways a party can breach a contract, including:

• Anticipatory breach: Also called anticipatory repudiation, this type of breach occurs when the breaching party informs the non-breaching party that they will not be fulfilling the terms of their contract. Once the non-breaching party is notified, they can sue the breaching party for breach of contract;
• Minor breach: A minor breach of contract occurs when a party fails to perform some small detail of the contract. When this occurs, the entire contract has not been violated and can still be substantially performed;
  • This also arises when there is a technical error with the contract, such as:
    • a wrong date;
    • an incorrect price; or
    • typo within the terms of the contract; or
• Material or fundamental breach: These are the most common types of breaches that form the bases of breach of contract actions. This occurs when the breach is so substantial that it essentially cancels the contract because it renders performance by either party impossible.

There are also other ways that a contract may be breached, including when:

• A contract is fraudulent;
• A contract was formed illegally;
• A contract is unconscionable; and
• There is a mistake of fact in the terms of the contract.

The parties to the contract may also include conditions that are unique to their particular contract, which specify when a party’s actions can be considered a breach. In addition, state laws and the type of contract, such as a lease agreement or sales contract, may also indicate other ways in which a contract may be breached.

What are the Penalties for Breach of Contract?

Generally, there are two categories of remedies that a party may receive for a breach of contract, including legal remedies and equitable remedies. A legal remedy includes monetary damages, such as:

• Compensatory damages;
• Nominal damages; and
• Liquidated damages.

In contrast, an equitable remedy is issued by a court when a legal remedy is not sufficient to compensate the plaintiff for the damage that was done. Equitable remedies include:

• Specific performance;
• Reformation; and
• Rescission.

The difference between the remedies awarded will determine what the non-breaching party may expect to receive and what the breaching party will be required to do.

Do I Need a Lawyer for Help With a Legal Contract?

Having a contract that is legally enforceable is an essential way to protect yourself in any type of agreement or transaction, whether personal or business related. Prior to signing any contract, it is important to understand how they work and what you are agreeing to.

If you have any issues, questions, or concerns or simply wish for a lawyer to review a contract before you sign it, it may be helpful to contact a contract lawyer. Your lawyer can help with drafting, reviewing, or filing a lawsuit related to a contract and will represent you in court.