Your business may use contracts regularly or occasionally in dealing with customers, clients, suppliers, employees or independent workers. Here are some basic concepts to keep in mind.
- Contract Requirements. A contract requires a meeting of the minds and consideration (an exchange of things of value). First example: Joe offers to paint Betty’s house for $1,500 and Betty accepts the offer. Second example: ProtoCorp pays $100 to its employee Charlie in return for his promise not to compete with ProtoCorp in Washtenaw County for one year after his employment ends.
- Written or Oral. In many cases, an oral contract is binding. The main exception is a contract for the sale of real estate. Still, to avoid legal problems, any important business contract should be in writing.
- One Document or Several. A written contract may be a single document that both parties sign, but that’s not always so. For example, you may send a letter making an offer to another person or business. If the other person or business accepts in writing, you have a contract.
- Breach of Contract. If a party breaches a contract – that is, doesn’t honor its commitment – the other party can seek damages (monetary compensation). In some cases, a judge may require the breaching party carry out its commitment. This is called specific performance.
The attorneys at the Ann Arbor firm of Hamilton, Graziano & London frequently draft or review business contracts, and represent clients in resolving contractual disputes.