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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.
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.
Image via Pexels by Karolina Grabowska
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
Thomas G.
https://www.tgravelylaw.com/
Rene H.
I am an attorney licensed in both California and Mexico. I offer a unique blend of 14 years of legal expertise that bridges the gap between diverse legal landscapes. My background is enriched by significant roles as in-house counsel for global powerhouses such as Anheuser-Busch, Campari Group, and Grupo Lala, alongside contributions to Tier 1 law firms. I specialize in navigating the complexities of two pivotal areas: AI/Tech Innovation: With a profound grasp of both cutting-edge transformer models and foundational machine learning technologies, I am your go-to advisor for integrating these advancements into your business. Whether it's B2B or B2C applications, I ensure that your company harnesses the power of AI in a manner that's not only enterprise-friendly but also fully compliant with regulatory standards. Cross-Border Excellence: My expertise extends beyond borders, with over a decade of experience facilitating cross-border operations for companies in more than 20 countries. I am particularly adept at enhancing US-Mexico operations, ensuring seamless and efficient business transactions across these territories.
Jimmy V.
I’m a semi-retired, long-time US attorney with substantial experience in business and corporate law. I counsel startups and small businesses, help them set up corporations or LLCs across the country and draft a variety of contracts and corporate documents.
Karen S.
I'm an attorney available to help small businesses in Georgia get started with initial business set-up, required filings, tax strategies, etc. I'm also available to draft, review, and negotiate contracts. I can draft and file real estate quit claims as well. My experience areas include small business startups, information technology, technology innovation, real estate transactions, taxes, community associations, intellectual property, electrical engineering, the business of video game development, higher education, business requirements definition, technology consulting, program management, and the electric utility industry. I work part-time for a local law firm and part-time in my solo practice. I'm also an adjunct professor at Southern New Hampshire University teaching business innovation and business law. In addition, I'm part owner, legal counsel to, and a board member of a virtual reality video game development company. I am a member of the Georgia Bar Association. Please reach out if you need attorney, documentation or consulting help in any of those areas!
February 3, 2023
Philip D.
I was born and raised in New York and am a dual national of the U.S. and France. I am admitted to the bar of New York where I have my base and I have also lived and worked in France and Italy for many years. My practice is virtual with most business conducted by video conference, email and phone calls. I meet clients, co-counsel and others in person at their locations as needed. I obtained my law degree from Boston University. My undergraduate studies were done at Fairfield University, the University of Florence and the American University of Paris. I served as general counsel to the French consulate in Boston from 1993 to 1999 representing the French government and French citizens living and doing business in New England. My clients have included the City of New York, the New York Stock Exchange and numerous dot coms, negotiating and drafting tech contracts and advising them on international business issues. In my asset recovery and investigation work, I have obtained multi-million-dollar judgments against defendants in fraud cases. Please visit my website: ptd-law.com
February 4, 2023
Joseph M.
ADMITTED TO PRACTICE LAW IN CALIFORNIA SINCE 1999. EXPERIENCED & RELIABLE, LITIGATION, LEGAL COUNSELING AND REPRESENTATION
February 9, 2023
Kandil O.
A business law practitioner by passion, I take pride in the perfection of my contracting Skills. Every piece of information I gather and spin together transforms to a legally binding document, providing great legal protection for start-ups and leading to eventual growth. I am a natural in law and entrepreneurship, making for a perfect blend.
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