At Cook Nguyen & Ressler, PLLC, we understand that one of the foundations of a successful company in Texas is the business contract. Harvard University notes that with each of your company’s contracts, you create or maintain a relationship with another party. Within the contract you lay out the conditions of how you and the other party will interact.
You will probably have contracts that define a wide variety of business relationships, such as those between partners, customers, clients and others. Regardless of the type of contract, here are some basic elements that must be present for it to be legal:
- Competent parties: You and the other party must be able to understand that you are making a contract and what you are including in it.
- Consideration: Contracts are typically not one-sided. You and the other party are each providing something to the other, such as the exchange of product and payment.
- Offer and acceptance: The party with the product or service makes the offer of this within the contract, and the other accepts it.
- Intent to create legal relations: You and the other party must have the intention that the contract will be legally binding. If one of you does not intend for the contract to be legal, the document must include this intent in an explicit statement.
- Legal purpose: The contract must have a legal purpose. It cannot, for example, be a social or domestic contract.
If one of these elements is missing and a legal issue arises, it could put your company in jeopardy. For more information about steps business owners can take to prevent potential legal problems, please visit our webpage.