Every creditor should be familiar with the basics of business contracts. By definition, a contract is a legally enforceable agreement that specifies the duties of each party, the services to be performed, or the products or things to be exchanged (plus any related details). Having a clearly written contract may prevent problems such as disputes and misunderstandings, as well as providing a basis for legal remedies for each of the parties involved.
Contracts are vital to maintaining cordial and productive relationships with customers, partners, vendors, consultants, and any other person or entity involved in conducting that business. For a creditor, understanding the particulars of a debtor’s failure to fulfill a contract can be advantageous in pursuing payment and/or other legal remedies.
A legally valid business contract must contain several key elements:
▪ Offer, Acceptance, and Mutual Consent. A specific offer accepted by both parties, made of each party’s free will.
▪ Parties. Contract must include the names and/or entities of all parties (such as a company name) involved in the agreement.
▪ Consideration. An exchange of value (such as money, goods or services) between parties, with each party providing a consideration.
▪ Competence. Parties agreeing to a contract must be of “sound mind:” Each party must be adults, they must be mentally competent by legal standards, and they may not be under the influence of drugs or alcohol at the time the contract is executed
▪ Legal Purpose. The purpose of the contract must be a legal one and must be included in the contract, prior to the elaboration of the details. The stated purpose must include:
▪ Mention of the services provided
▪ The product created
▪ The labor exerted
▪ Any other specific element relating to the purpose of the agreement
▪ Terms And Conditions. A business contract must specify the rights and obligations of each party. These can include confidentiality clauses, deadlines and timelines for project completion, and payment due dates, amounts, and penalties. Additionally, statements can be incorporated regarding how the contract may be terminated and any consequences resulting from termination.
The majority of contracts are concluded to the mutual satisfaction of both parties. However, should one party fail to fulfill his/her responsibilities under a contract, there are legal remedies that are available. Before embarking upon any course of action, though, competent legal counsel should be consulted.
If you would like more information about business contracts, or if you need assistance from an attorney, contact Windtberg & Zdancewicz to schedule an initial consultation.
The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation in all collection matters. We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.