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How to Write a Legal Contract

Each State will have its own set of laws when it comes to how law courts look at a contact between two parties. At the very least, have a local attorney check and "review" the legal form (and other accompanying legal papers you may have written) over carefully before you decide to date and sign it.

Oftentimes it is thought that a contract does not exist if it is not in written form. This is a misconception. While some legal agreements have to be in drafted form, business agreements can be valid and enforceable even "in the absence of written evidence" of their contents. But it's wiser to reduce the legal terms agreed upon to writing because it provides greater evidence of what was originally agreed upon by the parties. Remember that the trader "offers" to sell something: the buyer "accepts" the offer by agreeing to buy it. The offer should be clear enough to identify the goods and the terms upon which it is sold.

How The Law Views Contracts

Certain classes of persons have limited juridical powers to contract, the principal groups being minors and bankrupts. Any legal contract made with a minor or a person under 18 years of age, may be unenforceable unless the contract is for things necessary to maintain the particular person his or her normal lifestyle. Examples of "necessaries" could be food, clothes, accommodation, and education. When in doubt, it is wise to have the contract guaranteed by a parent or guardian, and of course, duly notarized. Bankrupts have restrictions placed on their ability to enter into contractual arrangement. The law does provide protection to persons having bona fide dealings with undischarged bankrupts. The latter are liable to penalties if they obtain credit over $200 without disclosing their bankruptcy.

Sign On The Dotted Line Here
Sign Here . . .

It's really crucial that you clearly define the full and proper name(s) of the parties when you're preparing a legal agreement. In a case where you're doing business with a company, and especially if its incorporated, make sure that you ask for an original copy of the articles of incorporation to verify that you have the name correctly. Because there's millions of registered businesses and corporations in America, and it's possible to insert the wrong name in the agreement because of "subtle differences" in names which are very similar.

In some cases it may be almost impossible to bring about a successful legal case for say "breach of agreement" because a knowledgeable lawyer representing the other party claims you've actually been dealing with some other company and not that of his clients. For example, you may have entered into an agreement for a specific business service on behalf of your customer, say ACE Fencing Supplies. You may think that the correct company name is ABC Fencing Supplies, but the actual name on file lodged with a government agency may be ACE Fencing & Supplies Inc. This may not seem like a big difference to you but in a court of law the judge may have second thoughts about awarding you damages if for argument sake, your customer doesn't pay you.

The ALL important Consideration

You should thoroughly review any agreement thoroughly. Why? Because you should spot somewhere early in the agreement a statement that both parties agree on a certain amount of money, goods, products, services, etc., as a "consideration." The notion of a "consideration" in a legal agreement has a long history in the law courts of this land. And a "Consideration" simply denotes something of value in the eyes of the law. An exchange of "consideration" no matter if it's financial or something else of "Value" . . . is crucial for the agreement to be legally enforceable.

Both parties (dating and signing an agreement) must "give and receive" something of value in the eyes of the law. That "something of value" could be either one party hand over (that they'd not otherwise be indebted to hand over) or it could be "some right" that they give up (that they'd otherwise have been entitled to exercise). For example, if you agree to buy a car for cash then you must agree to "hand over" the cash directly to the seller, and the seller agrees to "hand over" the car to you. By doing so there is a "consideration," (or sufficient monetary value) for the agreement to be enforceable.

Here is another typical example. It is a mutual release of claims. Let's say, you damage a parked car (of course, it happened by accident) and you offer to pay the owner $1,550.00 to settle out of court. In a case like this, you agree to "hand over" the $1,550.00 to the owner, and the owner agrees that they will not issue you with a summons. In this case, you MUST get the owner to sign a written "release of liability" or a "general release form" to prove you've settled this matter between both parties mutually. Now, in this case, the "consideration" from your side ($1,550.00) and the consideration from the owner's side (giving up the right to sue for damages.) Even though the owner did not give up anything physical, there is "consideration" to support the agreement because the owner relinquished a legal right.

Court Appointed Judge
Judge (Justice)

Term and Termination

A powerful clause you always insert in an agreement is the "Term and Termination" provision. An agreement usually runs for a specific term or time period, and that period should be identified in the agreement. The term may be stated, in a simple wording such as: "The term of this Agreement will be for 24-months as of the date and signing of this Agreement"

What happens once the agreement term has expired? You might think that the agreement is finalised (and, usually it is) but in some circumstances (and, in some states) an agreement may be deemed to automatically "renew" itself for an extended period of time and in most cases its equal to the initial term. This could be true if the parties continue to "act" once the term has expired. However, this is NOT usually the case where it involves any business transactions or dealings in property. For example: if you were to continue selling a certain brand of product, and the customer agrees to continue paying (in accordance with the terms as outlined in the agreement one party may reach a conclusion that the signed agreement "has been extended" and/or renewed by the conditions as agreed upon by both parties), and for this reason, it may be essential to clearly state if you intend for the agreement to be renewed. For more helpful tips and information please visit How To Prepare Forms.

Contract law requirements

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