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What are some essential components of a corporate contract?

| Jan 27, 2017 | Contract Disputes

 

Contracts are usually the foundation of business relationships. Businesses in Louisiana have to make deals with vendors and wholesalers, suppliers and marketing agencies. The days of “handshake deals” are, in general, long gone. Most people who are involved in business in Louisiana live by the old axiom of “get it in writing.” In business, that means a carefully drafted and signed contract.

So, what are some of the essential components of a corporate contract? Well, for starters, it must be clear that both sides that are involved in the contract are actually competent to enter into an agreement. There must be no question that the individuals who are involved in crafting and signing the contract are able to do so.

Next, the basics of a contract – any contract – must be present: an offer, acceptance of that offer and “consideration.” Consideration is a legal term, but it is usually explained as the basis of the contract: what is being offered and accepted? For instance, if the contract calls for the purchase and delivery of goods, the “consideration” would be the price to be paid and what the amount in questions is going toward purchasing.

Another important detail that is usually covered in a contract is what the contingency is in the event that the contract is breached. While no party enters into a deal expecting a contract dispute to occur – that would be bad faith – the reality is that hundreds of lawsuits claiming breach of contract occur every year in Louisiana. If there is a provision in the contract that will tell the parties how such an issue will be governed and litigated, that can be helpful.

Source: FindLaw, “Contracts FAQ,” Accessed Jan. 21, 2017

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