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What are Legal Contracts?
Legal contracts are legally enforceable agreements between two or more parties that govern what each person can or can’t do. When these legal agreements are drawn up, promises are made between the parties that are upheld in the court of law.
Legal contracts are useful because they protect each party in case of a legal dispute. They also set expectations so that anyone that signs the contract understands their rights and responsibilities within.
Main Types of Legal Contracts in Business Law
Legal contracts play a vital role when it comes to law enforcement. When parties sign a binding contract , it gives law enforcement and the court system a reference document to help make decision.
In law, there are several types of popular legal contracts:
- Service Contract : A service contract is an agreement between a contractor and a customer that covers service, maintenance, and repairs of purchased equipment for a certain period.
- Employment Contract : An employment contract is a contract between an employee and employer that defines rights, responsibilities, and expectations of both parties during an employment term
- Confidentiality Agreement : A confidentiality agreement requires that all parties to the contract agree not to share or sell private information
- Sales Contract : A sales contract is a contract between a buyer and a seller that defines the rules and responsibilities of each party of the agreement
- Independent Contractor Agreement : When a non-employee is contracted by a company to complete a job, an independent contractor agreement a signed contract that explains the work being done, work deadline, compensation information, and roles and responsibilities of contract parties.
- Loan Agreement : A loan agreement is a contract between a lender and a borrower that explains the amount of money being loaned, the repayment schedule, and any associated fees that accompany the agreement
- Partnership Agreement : A partnership agreement is a contract document that explains the management structure, roles, responsibilities, and daily operations of a business partnership
Here is an article where you can learn more about popular types of legal contracts.
How Legal Contracts Work
Legal contracts are essential documents that protect parties when disputes happen and explain certain roles, responsibilities, and terms that each party agrees to.
For a legal contract to be admissible in court, it must meet the following requirements:
- The agreement must not require either party to do anything illegal. If an illegal act is required as part of the contract, the document would be considered unenforceable in the court of law.
- Both parties must agree to all the terms of a signed contract ; this is called mutual assent.
- There must be something of value exchanged that warrants signing a contract. This process is called consideration.
- Both parties must be of sound mind and able to make their own decisions when signing the contract. This also requires each party to be of age to enter into the agreement.
- No party may be forced into signing a contract. If the agreement is not made of the free will of both parties, it constitutes grounds to terminate contract agreements.
If a contract does not meet each of these requirements, the agreement is considered null and void and will not hold up in the court of law. When this happens, the contract is typically immediately vacated and neither party can be held responsible for the terms of the contract, regardless of their wishes.
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What is a Breach of Contract?
A breach of contract occurs when one or more parties fail to uphold the obligations that they agreed to upon contract signing. If a rule within a contract is broken, you can usually do one of the following:
- Sue
- Demand a remedy
- Terminate or amend the agreement
Let’s say you hire a mechanic to fix the air conditioner in your car. When you bring the car in, the mechanic does a quick diagnosis and informs you that the blower motor needs to be replaced and the freon must be recharged. You agree to the work and sign the work contract that allows the mechanic to complete the job.
A week later, you come to pick up your car and realize the air conditioner is still not working. When confronted about the situation, the mechanic states that he was unable to source the blower motor for your vehicle, so he just replaced the freon. However, the contract clearly states that the blower motor was to be replaced.
This situation constitutes a breach of contract.
While your car was in the mechanic’s shop, you were forced to use a taxicab to get around, and you missed hours of work as a result. Because of this, you can sue the mechanic for damages, which would include lost wages, taxi expenses, and a refund for the blower motor part and service.
Your second option is to demand a remedy. This would involve opening a discussion with the mechanic about the problem, demanding that he source the blower motor and fix the air conditioning. You could do this by sending a demand letter from a lawyer.
The last option is to amend the agreement. This might include removing the charge for the blower motor and the related labor from the bill and modifying the contract to include an agreement solely to recharge the freon in the car.
Check out this article to learn more about how legal contracts work.
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Examples of Business Legal Contracts
No matter what industry a business is in, legal contracts play a vital role. Signing contracts helps customers and clients understand the services that businesses provide, and for companies, they provide vital protection, as well.
Business legal contracts typically cover one of three areas:
- General
- Employment
- Sales
General Business Contract Example
A great example of a general business contract is a partnership agreement. When a company creates a partnership agreement, it defines the roles, responsibilities, and liabilities of partners and shareholders in a company. Some of these usually include:
- Goals
- Operations
- Names and personal details of partners
- Decision-making procedures
- Partner contributions
- Profit and loss distributions
- Financial liability
- Tax liability
Employment Contract Example
Employment contracts are important to businesses because they govern the relationship that ownership and management have with the employees of the company. Employment contracts typically cover the following areas:
- Rights
- Responsibilities
- Obligations
- Compensation
- Scheduling
- Employment duration
- Benefits
- Confidentiality agreements
Sales Contract Example
Sales contracts govern the interactions between a buyer and seller. They are used to ensure that consumers fully understand the deal they agree to and that sellers can be held accountable for any unscrupulous business practices.
Here is a quick overview of what sales contracts can include:
- Selling price
- Product information
- Warranties or service contract details
- Contract duration
- Payment methods
- Sales agreement
- Purchase agreement
Get Help with Legal Contracts
Whether you need to draft a contract, get help with a contract review or get advice on a contract negotiation, there’s one person you can count on to get the job done right: a lawyer. Contract lawyers have special expertise in all areas of legal contracts and can help you make the most of your contracts.
Post a project on ContractsCounsel today to get matched with contract lawyers who specialize in legal contracts.
Meet some of our Legal Contracts Lawyers
Harry S.
Stirk Law is a law firm based in London that advises on dispute resolution, commercial and corporate arrangements, employment and private wealth. We are experts in our areas and experienced in advising on complex and high value matters in the UK and internationally. We have extensive onshore and offshore experience across a variety of areas such as the administration of trusts together with complex fraud and trust disputes. Our expertise includes the conduct of significant and high-value cases valued at up to in excess of £1 billion over a combined 40 years of legal practice in England, Jersey and Guernsey. As well as having a large international network, we work closely with a corporate investigations and risk advisory business based in London and Vienna. Together we can deliver a holistic service for cases involving fraud, dissipation of assets or other illegal activity.
Talin H.
Talin has over a decade of focused experience in business and international law. She is fiercely dedicated to her clients, thorough, detail-oriented, and gets the job done.
Max M.
Results oriented business attorney focusing on the health care sector. Formerly worked in Biglaw doing large multi-million dollar mergers and acquisitions, financing, and outside corporate counsel. I brought my skillset to the small firm market, provide the highest level of professionalism and sophistication to smaller and startup companies.
Joseph L.
Mr. LaRocco's focus is business law, corporate structuring, and contracts. He has a depth of experience working with entrepreneurs and startups, including some small public companies. As a result of his business background, he has not only acted as general counsel to companies, but has also been on the board of directors of several and been a business advisor and strategist. Some clients and projects I have recently done work for include a hospitality consulting company, a web development/marketing agency, a modular home company, an e-commerce consumer goods company, an online ordering app for restaurants, a music file-sharing company, a company that licenses its photos and graphic images, a video editing company, several SaaS companies, a merchant processing/services company, a financial services software company that earned a licensing and marketing contract with Thomson Reuters, and a real estate software company.
July 20, 2021
Jaroslaw P.
Attorney - I graduated in Law from the University of Wroclaw and in Economics from the Scottish University of Aberdeen; My legal interests include, in particular: contracts, intellectual property, and corporate law, as well as transactional / regulatory advisory along with related risk management (M&A); The industries with which I have worked most often are: IT, real estate and construction, professional sport, industrial chemistry and medicine, oil & gas, energy, and financial services; I possess many years of experiences working with international entities for which I have prepared and negotiated contracts, as well as (due diligence) reports, analyses, litigation documents, and presentations; Apart from law firms, I have also worked for investment banks and big 4 - thanks to that I also gained financial, technological, and consulting experiences; I shall be described by: accuracy, openness, honesty, concreteness, a broad approach to the problem, and ... a lack of bad manners, along with a good sense of humour :)
July 29, 2021
Stanley K.
Stan provides legal services to small to medium-sized clients in the New England region, and throughout the U.S. and abroad. His clients are involved in a variety of business sectors, including software development, e-commerce, investment management and advising, health care, manufacturing, biotechnology, telecommunications, retailing, and consulting and other services. Stan focuses on the unique needs of each of his clients, and seeks to establish long term relationships with them by providing timely, highly professional services and practical business judgment. Each client's objectives, business and management styles are carefully considered to help him provide more focused and relevant services. Stan also acts as an outsourced general counsel for some of his clients for the general management of their legal function, including the establishment of budgets, creation of internal compliance procedures, and the oversight of litigation or other outside legal services.
July 30, 2021
Sam W.
Entertainment attorney and film producer. Counsel clients on all matter of entertainment-related contracts, including talent representation, crew deals, financing agreements, and production legal. Former litigation attorney and owner of a documentary and scripted film and television production company. Well versed in small business foundation and general business contracts.
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