Cornell Law School mentions that a contract is a legally binding document that develops certain obligations and is enforceable by law. Contacts don’t necessarily have to be made between two people but may contain several individuals or entities. Legally binding contracts are a specialty of individual law offices like Horst Shewmaker Law, but several misconceptions abound about crafting a legally binding document. This article addresses what people think about lawfully binding papers and how to manage writing one yourself.
Why Have a Legally Binding Contract?
The law defines several contracts as needing to be written down. Even for deals that don’t require written documents, having a penned arrangement can help ease future problems. Typically, if you’re exchanging a significant amount of money for an asset or property, you should have a legally binding document drafted. In the future, if you have problems with what was said or done at the time of transfer, the written document comes into play. It will give you a concrete record of the obligations and liabilities of both parties at the time of transfer. It solidifies the agreement on paper.
The Construction of a Legally Binding Contract
As The Balance SMB tells us, contracts must have three significant parts before they qualify as legally binding:
· Agreement: The agreement deals with an offer, the acceptance of that offer, and the mutual consent of both parties. None of the individuals within the contract can be forced or coerced to sign the agreement against their will. If this occurs, the agreement becomes null and void. Both parties are required to agree to the same terms of the document. If one or more parties aren’t serious about the contract, then there is no legal binding for the paper.
· Consideration: Some value must be part of the consideration for the transfer of money and assets. Both parties are required to give something to form a legally binding contract. If only one party provides something, there is no contract. Consideration applies to every contract, even if the transferred item is intangible.
· Competence: The stipulation for competence is that both parties need to be of “sound mind.” None of the parties should be underaged (minors), and all parties must be fully mentally competent when the contract was signed. If one party isn’t qualified, i.e., intoxicated, a minor, or under the influence of drugs, then the agreement can be ignored by the other party (disavowed).
A Contract is Vital for Business
It doesn’t matter what you’re transferring with the contract. Having one can help you interact with other parties, secure in knowing that everyone’s roles are defined. Contracts serve as a protection to both purchaser and seller. They don’t need to be made by a legal representative, although having someone who knows the law goes through it afterward can help spot problems that might arise. Dealings that are protected under contracts encourage more confidence and allow individuals to feel safe that their transactions can be defended in a court of law if needs be.