This has to be the most important thing every business owner should know about and this is because, you might not have a location, you might not even register your business but one thing that you would constantly have are business contracts. Example of this is, if the first thing you decide to do as a business owner, is to print business banner, you have a contract with your printer. Even if you decide to design your banner yourself, lets say on canva or any other design app, the application, you still had a contract with that app, remember that thing you refused to read when you signed up, yes that was your contract. Also, with your proposed clients/customers, you would repeatedly have various contract with them.
What is a contract? It is a written or oral agreement between parties, creating mutual obligations that are enforceable by law.
Following the above definition, we realise that:
- It might be written or oral
- One person/party cannot form a contract, they have to be two or more.
- There must be obligations on the parts of the various parties. For instance, one party agrees to sell a particular good or deliver a particular service while the other party agrees to pay for that good or service
- It must be enforceable by law.
TYPES OF CONTRACT
VALID CONTRACT: this is a contract that was properly formed, it is binding and enforceable on all parties to the contract
VOID CONTRACT: This contact is basically dead-on arrival because it is legally unenforceable, starting from the time it was created.
VOIDABLE CONTRACT: it is an agreement between two parties that may be rendered unenforceable for several legal reasons which may include failure to disclose a material fact.
ELEMENTS OF A VALID CONTRACT
AGREEMENT: all parties to the contact must agree on ALL the terms of the contract
CONSIDERATION: Both parties must bring something to the contact. Party A can bring money while party B brings goods or service.
WRITING: A contract might be written or oral. However, where the law states it must be written, having an oral agreement makes the contract voidable. Example is buying a house.
CAPACITY: All parties must be competent and able understand the consequences of the contract.
LEGALITY: The agreement must be legal. An agreement to rob a bank and share its proceeds is illegal. An agreement to buy marijuana (weed) in Nigeria is illegal, so if you pay for weed and the vendor refuses to deliver, there is nothing you can do about it.
That is all the basic things you need to know about contracts. It is however important that you get a lawyer to review this contract for you because despite all the above, there are many things you can miss.
Remember that it is cheaper to pay a lawyer than to have a void contract.
DISCLAIMER: Please note that this article is for general information purposes only. These articles do not and are not intended to constitute legal advice based on any information provided in this article. Please consult with your own legal counsel on your situation and specific legal questions you have. The information provided in this article is not privilege and does not create an attorney-client relationship with STARR ATTORNEYS or any of the firm’s attorneys, nor does the transmission of comment or an email create an attorney-client relationship.
