Contracts and agreements are an essential part of conducting business for all companies, regardless of their size. Contracts are becoming more complex and proper drafting has become an essential part of Florida business law.
A contract that contains specific essential terms may be used to support a legal case in court over a disputed matter. When one party to an enforceable contract claims that the other party breached or broke its terms, that aggrieved party may file a lawsuit. Contracts and agreements are not the same. An agreement is a mutual understanding between parties about their respective rights and responsibilities. A contract, however, is an agreement between parties containing enforceable obligations.
A contract must meet several requirements to be enforceable. First, there must be a specific offer and acceptance of that offer. Parties must freely consent to the contract without coercion or duress. Both parties must agree to the same terms and intended to draft a binding agreement. Next, the parties must exchange something of value, known as “consideration.” It may be money or services. Without consideration, the parties merely exchanged a gift. Finally, both parties must be competent and understand the situation and what is required. A party cannot be a minor, must be sober and cannot be mentally deficient. If a party is not competent, the contract is invalid, and the other party can disavow it.
The contract must be for a legal purpose. It cannot be an agreement for an illegal act. Verbal contracts may be legally enforceable. But, some contracts must be written. These include long-term contracts. Also, people may not unknowingly enter a contract and be forced to comply with its terms.