Contracts drafting

Following are the elements of binding a contract:

• Mutual Agreement
• Expressed By a Valid Offer and Acceptance
• Adequate Consideration
• Capacity
• Legality

The law normally assumes that every person has the capacity to contract. But if a party doesn’t have the capacity, then the contract is considered voidable and the party that doesn’t have capacity may not want the contract. Contractual capacity is a must for the parties for an agreement. It is the capability to understand the contract’s nature and that it is being made.

The agreement may be affected if one or both parties made a mistake. A unilateral mistake is an error made by one party and not known by the other party that generally does not affect the enforceability of the agreement. The agreement will be void if both parties make the same mistake and that mistake is related to a key factual matter.

Consideration is what the promisor requests and gets as the cost for the promise. The person who makes the promise is called the promisor and to whom the promise is made is called the promisee. Consideration involves something that the promiser is not entitled to otherwise. It is not compulsory to use the term “consideration” in an agreement or contract. You can take consideration in terms of legal value and economic value. The most common form of consideration is the economic value (money, etc.) but it doesn’t always have to involve money. To enforce a contract, each party needs to change his/her legal position in some manner. You cant bind and enforce an agreement or contract if it lacks consideration.

Courts won’t enforce any kind of contracts or agreements that violate public policies or are illegal. These types of contracts are void. If the contract that is void hasn’t been performed, neither party can’t take legal action for damages. Any contract or agreement that demands the commission of any crime is illegal. For example, an agreement to defame a person is void.

No, oral contracts are just as effective and enforceable as written contracts. But some contracts need to be in writing to be effective and enforceable by a Court.

A contract is usually settled by the performance of the terms mentioned in the contract or agreement. If one party offers to perform the contract under its terms and the other person won’t allow performing, the contract may be considered discharged.

You need to check:

• What Damages Can Be Awarded?
  Two types of damages need to be awarded in case of a breach of contract is proved.
  
  • Compensatory Damages
  • Punitive Damages
• How are Compensatory Damages Calculated?
  The calculation of damages depends on the type of contract and loss that was suffered.
  
• Are There Any Limitations on the Award of Compensatory Damages?
  One important limitation is the duty to mitigate. The non-breaching party needs to minimize the damages amount to a reasonable extent.

A written contract gives each person a chance to completely understand his or her responsibilities under the agreement or contract, and clear any ambiguity before signing. It also allows each party to get guidance from a lawyer to understand if there are any issues in the contract. Finally, in case of a lawsuit, a written contract provides exact terms and conditions of the contract to the court, instead of each party giving their interpretations.

Yes. A contract is illegal if you need to do illegal activities to fulfill the terms of the contract. An international contract may be illegal if the goods and/or services are legal in one country, but illegal in the other country.

A breach of contract is when one party doesn’t perform its responsibilities under the contract. A breach can occur in various ways: if a party doesn’t fulfill the terms on time, performs in a way that is not consistent with the terms mentioned in the contract, or doesn’t perform its obligations at all.

There are three basic elements that every contract needs:

• An Offer
• Acceptance Of the Offer
• Consideration (money, goods or services, or the mutual exchange of promises)

It can be determined by analyzing your contract. You can take the following actions:

• Some contracts allow the non-breaching party to give notice before filing a lawsuit to allow the other party to “cure” the breach.
• Some contracts allow the parties to resolve the dispute through arbitration before filing a lawsuit, in which the parties need to hire an unbiased third party and try to negotiate the terms to settle their dispute.
• Some contracts include “forum selection” provisions that determine the particular court in which a lawsuit must be filed.

Under certain situations, a contract can be reformed or terminated if the parties made a mistake while entering into a contract. If the mistake is mutual then the probability of reforming or terminating the contract will be increased. You should consult with a lawyer if you have queries regarding the enforceability of a contract.

Some contracts have provisions that allow disputes over the agreement or contract to be arbitrated instead of filing a lawsuit. Arbitration is a process by which a mediator or a panel of arbitrators chairs the case and hears evidence from both parties. Mostly obligatory arbitration provisions are used in construction agreements and contracts.

It depends on the conditions of the contract and the nature of the breach. Parties are usually entitled to compensatory damages in which non-breaching parties can ask for compensation to recover from damages. Contracts may have limitations on the amount and type of damages to be charged, like specifying the number of damages (“liquidated damages”) that will be given in case of a breach.