What Makes a Contract?

Businesses are complex organizations that interact with society in many ways. For businesses to function successfully, one thing they need is contracts. That is why it is important to understand what makes up a contract.

One element of a contract is mutual consent. That is, both parties of the contract must agree completely of their own free will to enter the contract. Moreover, both parties must have full knowledge about what the contract covers. That way, future disputes can be avoided.

Another element of a contract is mutual consideration. Specifically, contracts need to involve things of value being exchanged by both parties. For example, one party may agree to give money to a company that in return agrees to perform a specific service for that party. In this example, there would be an exchange of money for services.

A third element of contracts is delivery. That is, both parties must meet the obligations that are set out in the contract. If one party does not meet its obligations, the other party can seek damages.

A fourth element of contracts is good faith. Good faith involves both parties not hiding anything from each other or misleading each other in anyway. For example, one party should not mislead the other party about what its obligations are because this is not an act of good faith.

While contracts are a relatively simple concept, they have to be written in a complicated way to take into account legal requirements. Often, the legal jargon can be confusing for anyone who is not familiar with the legal aspect of contracts. All of this added legal jargon is used to ensure that contracts are fair, since contracts are so important to businesses.

Speak with an Austin Business Attorney

If your business has suffered from a breach of contract, or you are considering drafting business contract, having the help of the appropriate attorney will help immensely. For experienced legal help contact the Austin business lawyers of Slater Kennon & Jameson, LLP by calling 512-472-0432.