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The basics of business contracts and agreements

On Behalf of | Jul 21, 2022 | blog, Business & Commercial Law, Contract Disputes

For a business to be successful in Louisiana, there must be a good working relationship between the parties involved. One way to ensure this is to create a legally binding contract that everyone follows. This way, everyone knows what is expected of them, and there are no surprises.

Elements of a valid contract

Valid contracts under Louisiana business law have the following elements:

  • It must be in writing and signed by both parties.
  • The parties must have the capacity to understand the terms of the agreement.
  • Both parties should agree to the terms of the contract willingly.
  • The subject matter of the contract must not be illegal.

If any of these elements is missing, then the contract is considered void and unenforceable. In addition, Louisiana courts can refuse to enforce your agreement if they are unconscionable or are against public policy.

Types of contracts

The most common type of contract in Louisiana is the express contract, which is an agreement that is made orally or in writing. An implied contract, on the other hand, is one where the terms of the agreement are not expressly stated but can be inferred from the actions or conduct of the parties. There is also a quasi-contract, which is an agreement that is created to avoid unjust enrichment.

Forming a contract

A contract is formed when all the elements of a valid agreement are present. Sometimes, your partners or the court will need direct or circumstantial evidence to prove that all of the fundamental components exist. This evidence could be emails, text messages, or even the conduct of the parties or the nature of their relationship.

The next step is to determine its terms. If there is any ambiguity in the contract, Louisiana courts will construe it against the drafter of the agreement. This means that if there is more than one interpretation of the contract the court will choose the interpretation that is most favorable to the party who did not draft the agreement.

A contract or agreement is a vital part of your business. Without them, you’ll have to rely on trust and goodwill, which are not always dependable.