Understanding Business Contracts
A contract can be described as an agreement between parties or legal entities that acknowledge the duties and rights of each party. In a business contract, a company may enter into an agreement with a vendor or another business to provide goods or services in exchange for monetary payments or other goods or services. Contract drafting and negotiations are important steps when creating a business contract.
What Is Contract Drafting and Negotiation?
Contract drafting involves putting the terms and conditions of an agreement into writing. The purpose of contract drafting is to establish a legally binding document that is brief, clear, and states the intentions of each party. Through contract drafting, the parties can discuss the terms and conditions of the agreement before it becomes legally binding. Contract drafting can help achieve the following:
- Clarify business relationships, duties, and rights of each party or entity
- Prevent misinterpretation of communications and agreements
- Avoid potential contract disputes and litigation
- Protect real property, intellectual property, and asset values
- Show proof of an agreement between the parties involved
Contract negotiation is a process of concession or compromise that the parties go through to reach a feasible agreement. During contract negotiations, the parties seek to reach favorable terms and mitigate legal, financial, and operational risks. Negotiating the right agreement can help build better relationships, avoid potential conflicts, and set both businesses up for long-term success. Most importantly, you must ensure that any agreement drafted or negotiated is legal and enforceable.
Why Establishing Enforceable Contracts Is Important
Establishing a business contract that is legally binding and enforceable is important to protect the interests of the parties involved, prevent erroneous interpretation, and mitigate disputes. For an agreement to be legally binding, it must meet certain requirements imposed by the Uniform Commercial Code (UCC). The elements that make a contract enforceable include:
Offer: An offer is a written or verbal promise to provide a product or service in exchange for money or another product or service. For a contract to be enforceable, one party must make an offer to the other party.
Acceptance: Acceptance is verbal, written, or conduct agreement to the specific terms and conditions of an offer. For a contract to be enforceable, the other party must accept the offer. Offer and acceptance form “mutual assent” together.
Consideration: Consideration is the value that each party contributes to the contract. A consideration might be in the form of monetary payments or a promise to perform a certain act or task.
Legal Purpose: Under UCC law, a contract must be for a legal purpose.
Competency and Capacity: The parties to the contract must be legally competent, of sound mind, and have the capacity to enter into an agreement.
An experienced New Jersey contract attorney can review the contractual terms to help make sure they are legal, valid, and enforceable.
What Is a Contract Review?
A contact review can be described as the process of comprehensively reading, analyzing, and understanding a written agreement. It involves reviewing the content, terms, and conditions of the contract line-by-line. A contract review is best done by an attorney, and here’s why.
An attorney can:
- Deeply analyze and help you understand the terms of the contract
- Determine whether the contract is fair
- Help you negotiate improved terms
- Measure the feasibility of the contract
- Help ensure that your documents are legal, valid, and admissible in court
- Forecast and mitigate potential contract risks
- Ensure that your contracts are free of loopholes
- Guide you on what to do in the event of a breach of contract.
An experienced attorney can help review the terms and conditions of the contract thoroughly to ensure that all terms are fair, straightforward, and legally binding.
Working with An Experienced Contract Drafting Attorney
Having a properly drafted business agreement is crucial to clarify business relationships, expected duties, and rights of the parties involved. Moreover, having the agreed-upon terms properly documented in writing can help you avoid potential disputes, give you security, and help you achieve peace of mind. Therefore, when drafting an agreement, consulting with an experienced contract attorney is important for detailed guidance and to help protect your best interests.
Attorney Emmanuel Coffy has devoted his career to guiding and assisting individuals and business owners through the complexities of contract drafting and contract negotiating. As your legal counsel, he can evaluate your unique situation and explore your available legal options. Whether you are drafting, establishing, or negotiating a business contract, Attorney Emmanuel Coffy and his legal staff can guide you through the processes involved, review the final terms of the agreement, and help ensure that it is valid, legally binding, and enforceable.