What Constitutes a Legal Contract?

A legal contract is used for a wide variety of situations. These documents are legally enforceable and are agreements between parties who want to create obligations that are mutual for those who are involved. Most of the time, the parties involved promise to do something else for everyone else involved in the agreement. Contracts can either be oral or written. However, written contracts are more preferred as they are easier to refer to in cases where one party does not follow what has been agreed upon. Written contracts also serve as proof that agreements between the parties do exist.

What happens when someone breaks the agreement? In cases where a breach of contract has been committed by one of the parties involved, the law gives a remedy. Remedies are usually in monetary form, a punishment, or it can also be in a form of circumstance that has been stated in the contract.

If you are someone who is just starting out with making contracts, then we will give you what elements make contracts what they are. We also have a few contract samples for a wide variety of situations. Stay tuned and let us tell you more about contracts, breach of contracts, and a few tips that will let you in on how you can write contracts that are effective and can be easily understood.

Contract for Commercial Sale of Goods

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Sample Donor Contract

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Sample Land Contract

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Sample Caregiver Contract

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Fee for Service Contract Example

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What Are the Requirements of a Legal Contract?

The contract between two individuals helps to protect the rights of the parties. To make contracts legal, regardless of whether they are written or otherwise, it must have the essential elements to make it effective.

  • The object of the contract. What is being agreed upon in the contract is called the object. It should be something that abides the law, is feasible, and is definite. Objects that are considered to be illegal are not enforceable. Some examples would be contracts that talk about murder, drugs, and other circumstances that might involve criminal offenses.
  • A mutual agreement between two parties. The parties involved in the contract must have a mutual agreement with each other. This means that one party offered something to the other individual or individuals involved with said agreement and that the other/s involved agreed to the offer. Let us take for example an employment contract. Employment contracts, more often than not, give the specifics of what an employee’s duties and responsibilities are. Once the employee affixes his/her signature on the contracts, it is now understood that both the employer and the employee have an understanding about the agreement.
  • Mutual consideration. When you agree to give up something of value in exchange for another thing of value, this is called mutual consideration when it comes to contracts. Take for example a service contract. Service contracts will basically state that in exchange for the service provided, a certain amount of money will be paid by the individual who requested for the service.
  • The parties involved with the agreement. With the exception of minors, every individual who is competent can enter into a contract. The names of the parties involved will be reflected in the contract. If the individual has a title to his/her name, it should be used as well. Remember that entering a contract with a minor makes the contract null and void.
  • Genuine assent. Genuine assent means a complete agreement by the parties involved. The parties should agree to the agreement on their own free will. Should a party demonstrate that he/she does not fully agree with what is stated in the contract, then the contract shall be considered to be invalid. Some reasons why a party may not agree to what is stipulated in the contract are misunderstandings, lacking information, forced to agree, or influenced by another body.

 

A well-written contract will contain all of these elements. Contracts that contain all of the necessary details about the agreement serve as a good protection from misunderstandings and contract breach.

Breach of Contract

What Is Breach of Contract?

Breach of contract is the failure of one party involved with the contract to perform his/her promised obligations as stated in the contract without any valid excuse for the failure to perform said duties. There are four types of contract breach:

  • Actual Breach. This circumstance typically occurs when one party fails to perform his/her duties on a particular deadline or if said party refuses to perform his/her duties while the other party/parties duly fulfill their obligations.
  • Anticipatory Breach. When a party fails to perform his/her duty before a set date, he/she is breaching the contract in advance. Thus the term, anticipatory contract. One good example is selling of items. Let us say that one party agrees to sell the item to the buyer. However, two days after the agreement, the seller retracts his/her decision; this is an anticipatory breach.
  • Minor Breach.  Minor breach, also known as partial breach, is the failure to do a minor obligation stipulated in the contract. However, since the failure to perform is just a minor issue, the contract may still be completed. There might be sanctions for the failure to perform depending on what is stated in the contract.
  • Material Breach.  Material breach is considered to be a major failure to perform the obligations under the terms and conditions set in the contract. For example, in a house sale contract, it might state that once the deed of sale has been transferred to the buyer, everything about the house, including the house keys, will now be the responsibility of the buyer. However, if the seller refuses to give the keys to the buyer, then this is now considered as material breach.

 

Remedies for Breach of Contract

For contract breach, there are several remedies that can be done.

  • Specific Performance. The court can force the breaching party to do the obligations that have been stated in the contract and complete them within a certain period.
  • Punishment. The court can order to have the breaching party a punishment for what has been committed. Punishments are typically done if the act of breach is considered to be abhorrent to some extent.
  • Restitution. Reconstitution is when the court orders the breaching party to pay the amount that the aggrieved party initially shelled out. The goal of this remedy is fairness.
  • Compensatory Damage. Through this remedy, the aggrieved party is usually given a monetary award as a means of compensation for the damage that has been committed due to breach. The court will usually ask the breaching party to give a specific amount of money that will be considered as equal to the obligations that were not fulfilled.

 

Sample Lease Contract for Apartment or Condominium

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Sample Contractor Contract

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Legal Employment Contract Template

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Legal Agreement Contract

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Legal Construction Contract

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Tips for Writing a Legal Contract

Before you start writing contracts between you and another individual or several individuals, make sure that you consult a lawyer or a legal adviser to ensure that what you include in your contracts are all correct and are clearly stated. We want to make sure that you fully understand what it takes to write a legal contract and what are the things that need to be considered before you consider writing a contract. We have gathered a few tips that you can follow on how to write a legal contract. This way, you will have a better grasp about writing a legal contract.

Understanding the Fundamentals

  • Find out if you need a contract or otherwise. Circumstances that might need a contract are those where items of significant value are exchanged; selling/buying of items, services, employment, or situations that involve a large amount of money.
  • Review the basic requirements of the contract. Before you start writing your contract, write down each of the essential elements first and then write down what you want the content of each element should make. Consider writing a contract that will be easily understood by all the involved parties without having to consult a legal aid or attorney.
  • Make sure that all the parties involved are of legal age. Contracts will only be valid if and only if the parties involved are of legal age. If minors or people with disabilities are to enter a contract, a guardian or an able representative will be the one to sign the contract.
  • Remember the considerations. Plan what you want to have exchange that is of value and ask the other party/parties what they would exchange for what you are offering. Make sure that you state it clearly and that the terms and conditions stipulated are enforceable.
  • Ensure that there is a “meeting of the minds.” You have to make sure that all the parties involved are in agreement of what will be reflected in the contract. If you can, have a discussion with the partied involved beforehand as this can save time.
  • Mutual assent is a must. Make sure that everyone agrees without being forced to do so. Fairness and honesty should be enforced for each of the involved parties.

 

Writing the Contract Proper

  • Basics are a must. Start with the date, then the names of the parties involved.
    • “This sales contract is between Name A and Name B.”
  • Write the exchange in detail. Make use of language that can be easily understood by all the parties involved. Make sure to describe all the deliverable in full and specific detail.
    • “Buyer has agreed to pay $20,000 in exchange of a Ford Taurus 2015. Said amount is to be paid within 45 days.”
  • Use an addenda, if applicable. Make use of an addendum if you forgot to put something in detail. It can also be added at the time of the contract or after the contract as long as everyone involved is in agreement.
  • Add a confidentiality clause or non-disclosure agreementAdding an NDA helps to ensure that the parties involved will not disclose any information to anyone who is not part of the agreement. A confidentiality clause will also help to protect the secrets of a company should there be any.
  • Contract termination process. Specify how long the particular contract will last and if it will be immediately terminated upon delivery of the deliverable. You should also include all the circumstances that would make the contract null and void.
  • Make sure everything covered by your contract is legal and follows the law. Laws per state may vary, so research on these laws first or consult a legal aid.
  • Leave ample space for signatures. The last page of a contract is usually reserved for the signatures of the parties involved. Make sure that the printed name is reflected, as well as the date when the contract was signed.

 

How to Execute Your Legal Contract

  • Have the other party/parties review the contract. Once the contract is done, show it to the involved parties. The outcome may be acceptance of the contract, rejection, or they may also present a counter-proposal letter.
  • Negotiation. It is highly important that with contracts, everyone is in agreement. Negotiate as much as you can until all parties come up with a mutual agreement.
  • Sign the contract. Once all the parties have come up with an agreement, it is now time that the contract would be signed. E-signatures are also accepted and will also make the contracts legally binding. A statement saying that the contract is effective upon signing should also be reflected.

 

Make sure that you prepare a copy for yourself and for the people who are involved with the agreement. Should you forget to prepare a copy for the other involved individuals, make sure you give them one as soon as possible.

We hope you learned a thing or two about contracts and what should be included to make it legally binding. Remember that all the contract examples we have prepared are all for free, so you can definitely download each one without having to pay a single cent.

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