What Is a Contract?

A contract is a legally enforceable agreement between parties. It is typically written.

All legal contracts must contain these specific elements:

  1. It must contain an offer. The offer is what someone is going to do – example: hire you, sell you a car, buy your business etc.
  2. The offer must be accepted – meaning you agree to what is offered, without any changes.
  3. It has to represent the intent of both parties to enter into a legally binding agreement. Essentially this means they need to understand what is being signed is enforceable by law.
  4. It must contain consideration. “Consideration” typically means money. It is something of value in exchange for what is being offered.
what are contracts

It is required that all parties enter into the agreement voluntarily and that they are all competent – meaning there is maturity and mental ability.

Contracts can be oral or even an email, but typically a properly drawn up written contract offers the most protection as it eliminates any he said/she said issues and clearly states the terms.

Contracts often contain Terms or Provisions. These are the details and specifics of the deal and the obligations and restrictions of both parties.

Contracts are typically written in legalese and have many potentially confusing clauses. The bigger the transaction, the more complex the agreement.

Contracts are crucial to protect businesses and shouldn’t be signed until an experienced contract lawyer has reviewed it. Often your lawyer will negotiate on your behalf to ensure maximum protection for you.

If you don’t have in-house legal or have a team that is not experienced in contract law, working with an Alternative Legal Service Provider, like CEO Law is a great way to get the expertise and service you need, without the standard high legal fees. CEO Law offers a free consultation to determine how we can help you with your contracts. Request your consultation now.

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