Creating Legally Binding Contracts for Your Small Business
Businesses, small and large alike, enter into many contractual relationships every single year. Legally binding contracts are extremely important because they protect the interests of your business and define the relationship between parties. Although many attorneys are skilled in drafting legally valid contracts, it is possible for you, as a small business owner to draft your own. But be careful!
If you are drafting a contract for your business, the following two elements must be satisfied in order for the agreement to be legally valid.
- There must be an offer by one party and acceptance by the other party to the contract. All parties to the contract must agree that something was offered and something was accepted.
- There must be consideration given. In order to have consideration, you and the other party to the agreement must each exchange something of value.
Those are three magic terms that lawyers learn in the first year of law school: offer, acceptance and consideration. In addition to meeting the required elements of a contract listed above, it is also wise to always put your contracts in writing. Some contracts are required to be in writing, but others are still valid if made orally. We once enforced a contract that was written out on a cocktail napkin! For purposes of clarity and preservation of the terms of the contract it is always a good idea to put all contracts in writing.
Also, the devil is in the details. Those “Terms and Conditions” in fine print that you see in all kinds of contracts contain the little things that could really define the relationship and the enforcement of the contract.Example
John, an Illinois small business owner, contracts with Creative Cleaning to provide John’s business with cleaning services. John drafts the contract between his business and Creative Cleaning. The contract states that Creative Cleaning will provide cleaning services to John’s business once per week for one year in exchange for $800.00 per month. Are the terms of this contract legally binding?
Answer: Yes. The contract contained an offer and acceptance by the other party. Consideration was provided because John was exchanging something of value, his $800.00, for something of value from Creative Cleaning, their cleaning services.Conclusion
Small business owners are presented with and enter into many contractual relationships every year. Whether the contract is with an employee, vendor, contract worker, or service provider it is important to carefully read all contracts to ensure the contract is legally binding and protects your interests. For additional information and an initial consultation, contact attorney George Bellas at 847.823.9030 Ext: 219 or firstname.lastname@example.org.