What Makes a Sound Legal Contract?
Whether you’re dealing with a real estate transaction, an employment contract, or an agreement with a business vendor, the documents you use are of vital importance. They say that the backbone of the legal world is in the paperwork, and it’s true- the contracts you sign determine the outcomes of everything in your personal life and your career. However, there are too many documents out there that aren’t clear, concise, or even legally enforceable. Disputes of all kinds often stem from two parties interpreting a contract in different ways. And when it comes to lawsuits, the preceding contracts form the foundation of both the prosecution and the defense.
Most legal documents go through three stages:
- Initial offer– creator of contract outlines their “bid.”
- Consideration or counteroffer– other parties consider the bid, and may request provisions or changes
- Acceptance– once final draft of contract is created, all parties agree and sign
If you are looking for housing, opening up a new business, or making any big financial transaction, it’s important to go through your paperwork with an eye for detail. Here are a few factors that make for a sound legal contract:
- All parties are clearly identified
Typically in the first paragraph or so of a contract, each party that is involved should be clearly identified. This could be an individual’s full name, or a business name.
- Terms are explained
What you are agreeing to, whether it’s an amount of money, a certain timeline, or an exchange of goods/services, should be easy to find and properly quantified in the contract.
- Special provisions are included
Sometimes things aren’t so straightforward, and a good contract will have provisions and allowances for unexpected occurrences. Outlining potential scenarios like “if x happens, then y,” is a smart thing to do in a legal document.
- Consequences are in plain sight
One of the trickiest parts of a contract is what happens if the terms are breached, and this is a place where many people trip up. For example, what it costs to break an apartment lease, when that money is due, who the fee is payable to, and any potential circumstances that would warrant breaking the lease, should all be readable in the contract.
- All parties are in agreement
It may seem simple, but it’s critical that all parties that are named in the document agree to the terms. Otherwise, the contract is not legally enforceable.
Contracts are a critical component of many personal and business interactions, and contract disputes can make for a legal nightmare. If you would like for an experienced attorney to review your contracts, or mediate a contract dispute, contact us at Overman and Overman Law today.