What is a Contract?
A contract is a legally binding agreement between at least two parties as a mutual promise made in exchange for something of value. Contracts are there to ensure that each party’s interests and the terms as constituted are protected by the law. Terms within a contract help outline the validity, effectiveness and enforceability of the agreement itself. Contracts may also offer ‘remedies’, or solutions available should there be a breach of contract or where the agreement is to be terminated.
Process and Procedure for Entering into a Contract
Some may be surprised that not all contracts must be expressed in writing.
Parties may enter into contracts either verbally, in writing, or a combination of both.
While legally binding contracts can be made verbally, a well-written document can help to prevent future potential disputes for all parties involved. This may include the contract’s duration of validity, policies for termination, solutions to potential disputes, and more.
To learn more about how Juris Notary can help with your contract needs, feel free to browse our contract services by clicking here.
Requirements For a Valid Contract
While contracts may be made in verbal agreement or in documentation, what parts of a contract makes it legally binding?
Contracts must include 4 essential elements to be considered valid:
1. Agreement
An offer, a statement of terms to which the person making the offer is contractually bound to, must be made by 1 party to the other, and the offer must be accepted. All parties must agree to the offer made and accepted unconditionally and must be communicated as so.
The constitution of adequate acceptance can depend on the type of contract. For example, if it is a transactional purchase between two parties, paying for a product may be considered an acceptance of the offer for the sale of the product.
2. Capacity
All parties entering a contract must have the ability to understand the terms of obligation and consent to such terms in the offer. Agreement and consent must be given voluntarily out of free will, from all parties, for a contract to be considered legally binding. Acceptance or consent given to a contract through method of force, coercion, fraud and other illicit undue influence, or misrepresentation) are not considered legally binding.
Note: Minors (children under 18) and individuals suffering from medical health conditions (such as in cases of mental illness, incapacitation, influence under drugs or alcohol) generally would be considered unfit in capacity to enter into a legally binding contract.
Depending on the situation at hand, individuals may wish to look into powers of attorney or speak with Notary Public directly to discuss alternative measures for legal representation.
3. Consideration
All parties must exchange something of value for a contract to be considered valid. For example, a new employment contract would include the employer’s offer of “x” wage for “x” amount of hours worked by the employee.
Examples of insufficient consideration for a legally binding contract include:
Something due to existing public or contractual duty
Something which occurred before the contract
Something of sentimental value
Something that is illegal
4. Intention
Not all agreements made between two or more parties are considered a legally binding contract. For instance, social situations where friends make an agreement to meet up for dinner, would not be considered as so.
To be clear, the parties who wish to enter into a legally binding contract must make their intentions clear that they wish to do so.
Process and Procedure for Terminating a Contract
A contract may be considered invalid or void when a party breaches the terms of a contract or if other conditions for termination are met. In any case, contracts may be terminated due to convenience or cause.
As such, it is highly recommended for contracts to be made in writing or for parties entering or ending contracts to speak with Notary Public directly to ensure proper handling of a legally binding contract.
Disclaimer: the information listed above is not exhaustive. This is for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind.
How Juris Notary Can Help You
At Juris Notary, it is our mission to help you with your legal contracts. Whether you are looking to draft a brand new contract, make changes to an ongoing contract or to terminate an existing contract, we are here to help.
For more information on notarization services and other ways that a Notary Public can assist you with your legal needs, please feel free to visit our blog. Should you have any questions regarding contracts or how Juris Notary can help further, feel free to contact us via 604.416.0211 or info@jurisnotary.com to get in touch with a legal representative today.
