A contract is an agreement between people or entities where one party agrees to perform a service or deliver goods for something of value. Contracts help define the terms of partnerships and make sure everyone is on the same page when providing goods and services. However, is every piece of paper signed by two parties legally binding? Whether you are offering freelance services or merging corporations, all contracts need the following elements to be legally binding.
In a contract, there must be a specified action offered in exchange for something of value. The action could be the delivery of a product or the performance of a service. The contract should specify the details of that product or service, including the scope of work, timeframe for delivery, and compensation. A contract must have the capacity to be fulfilled to be legally binding, meaning the person entering the contract must be able to perform the duties specified and be of legal age to do so.
The offer must be in exchange for something of value, which is called the consideration. The consideration solidifies the transaction between the promise of one party and the payment from another. The consideration is often money for the product or service; however, the only stipulation is that the consideration is something of value to be legally binding. Whatever the consideration is, make sure it is clearly stated in the contract.
The third crucial element of a legally binding contract is acceptance. Signing a written contract is one of the most straightforward ways to specify acceptance, but that is not the only way. The other party can also administer acceptance orally or through a video, email, or text. Florida law requires specific contracts to be in written form to be enforceable, such as real estate ventures, when the contract terms cannot be completed in one year. There may be some instances when requiring a single signature at the bottom of a contract is not enough to make it legally binding. In these cases, both parties may need to initial specific clauses.
The last element of a legally binding contract is to ensure both parties mutually understand and agree to its terms. Referred to as a “meeting of the minds,” there must be evidence that both parties understood all aspects of the contract and are entering it willfully. Signing a legally binding contract is one way to show mutuality. Even if a contract is not signed, specific actions such as distributing payment or agreeing to terms in an email may also prove to a court that both parties understand and agree to the offer, consideration, and terms.
Central Florida business Attorney
Our experienced commercial lawyers at The Boutty Law Firm can help draft legally binding contracts that protect you and your business from legal issues down the road. If you need to sign a contract and are unsure what it means, do not sign it without speaking with a business attorney. Call our office at 407-622-1395 and schedule a consultation today.