The Ins and Outs of Contracting

We enter into contracts all the time for business and personal reasons. Whether it is a purchase of a ticket to an event or the purchase of a house, almost everything we purchase involves a contract.

Think about this.

How many times have you clicked to accept the “terms and conditions” of a purchase online? Pretty much every time you buy something on the internet, right? By clicking that you accept them, you are entering into a contract with the seller of that product or service.

There is an important reason why companies always ask you to approve the terms and conditions.

It doesn’t matter whether or not you are entering into a relationship with a customer, with a vendor or an independent contractor; contracts are a fact of business. Contracts serve as legally valid agreements that protect your interests.

The attorneys at The Orlando Law Group can help any business looking to create or review their contracts to make sure they are binding and cover all of the important topics needed for business contracts.

What Makes A Contract Great?

Generally, to be legally valid, most contracts must contain two elements:

1. All parties must agree about an offer made by one party and accepted by the other.
2. Something of value must be exchanged for something else of value. This can include goods, cash, services, or a pledge to exchange these items.

The point when two parties agree can be a little fuzzy.

For example, many businesses will put a standard contract template before an independent contractor and expect it to be signed without any discussion. At that point – and the law is clear on this – a legal contract exists only when one party makes an offer and the other accepts all terms of that offer.

In this example, the contractor is still free to rebut any of the points in the contract and make a counteroffer, until an agreement has been reached.

Offers are rarely accepted immediately and further discussions or amendments may be required. Unless the offer has a deadline for acceptance, it can remain open.

In addition to ensuring both parties agree on the terms of an offer, the second element that ensures a contract is legally valid is that both parties exchange something of value.  This is important since it differentiates a contract from being a one-sided statement or even a gift.

“Something of value” can be as simple as a promise to perform certain services by one party while the other party agrees to pay a fee for the work performed.

Most business transactions are based on this exchange of promises. However, the act of doing the work can also satisfy the exchange of value rule. For example, if you contract with a vendor to provide you X and Y, but you decide you need to add Z to the final deliverable, the vendor can create a binding contract by actually doing Z – something which you can’t object to if you change your mind.

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