As a business owner, it is likely you enter into contractual relationships each day. Many of you cope with written contracts with a fairly regular basis. However, would you understand the basic concepts of contract law and have no idea of legally binding contract? Do you know excellent customer service when reviewing contracts cooked by the other party, or perhaps your own attorney which make it a legally binding contract?
Under Wisconsin contract law, legally binding contracts, whether oral or written, require three basic components: offer, acceptance, and consideration. An “offer” mandates that one party provides provide something of worth to another party, that is then “accepted” by that other party. “Consideration” ‘s what the two parties are obligated to switch with each other within the contract. Consideration should be something of worth, and also the consideration has to be mutual, i.e. both parties must provide something worthwhile under the agreement. For example, a legal contract whereby an event agrees to spend you $1,000.00, without receiving anything inturn, is actually definition not really a contract.
Typically, consideration takes the shape of money paid in return for the production of goods or services. This does work for multi-million dollar transactions between international conglomerates, and once you take your car or truck in for repairs using a mechanic. One corporation agrees to pay for millions of dollars for the next corporation to formulate specific software or some other product, and you also pay your mechanic to switch your spark plugs. In either case, we have an offer, acceptance, and consideration, and for that reason an enforceable and legally binding contract. Keep in mind, however, that legally binding contracts might need consideration in addition to money, for instance when two parties agree to change parcels of property.
Under Wisconsin contract law, all contracts come with an implied duty of “good faith and fair dealing” from both parties towards the contract. While this is admittedly a fairly broad phrase, in simple terms it means that, once a binding agreement has been reached, all parties have an obligation to create reasonable efforts to satisfy their respective obligations, and also to avoid taking actions that could hinder the performance from the contract.
Parties to contracts hold the right to enforce them in courts of law. Generally, the remedies for breach of contract take 1 of 2 forms, either specific performance or monetary damages. Specific performance is definitely an equitable remedy quite often awarded within the involving real estate investment transactions, and consists from the Court ordering the breaching party to meet its obligations, i.e. “specifically perform” anything.
In many cases, the fix for breach of contract is money damages, usually in the sort of “consequential” damages. Consequential damages are the type damages that flow naturally derived from one of party’s breach of any contract, and will include the cost to exchange a product which was never delivered, the purchase price to repair a defective product, and then for any resulting lost profits. However, consequential damages should be “reasonably foreseeable” at the time the agreement was created to be recoverable.
With certain exceptions, oral contracts might be just as valid and legally binding as being a written contract. As an attorney, I recommend that if possible, contractual obligations be set forth in the written document signed by both sides. As a general rule, courts must look only at the written contract itself to interpret the parties’ obligations, unless there is certainly some ambiguity in the agreement. In the absence of any written agreement, or when an ambiguity exists within a written contract, the judge may browse extrinsic evidence, like the testimony in the parties, to ascertain their intent. In other words, the judge and the jury is going to be determining the fate on the parties, as opposed towards the parties themselves. Therefore, written contracts that clearly define the obligations on the parties are nearly always preferable to oral contracts.
I will close which has a suggestion. Never overlook the “boilerplate” language you often find at the conclusion of contracts. While these provisions may seem like an afterthought added because of the attorneys to generate the contract longer, they are usually of vital importance, specifying among other things where written notices (one example is, terminating anything) should be sent in the contract, to when a lawsuit need to be filed and what jurisdiction’s laws will govern the agreement. While it is vital that you review the detailed provisions on the contract, it can be in the same way important to comprehend the “standard” provisions at the end from the contract.