Understanding what makes a contract valid and what is considered a contract breach is important for business owners seeking to protect the interests of their business to understand. When business owners familiarize themselves with the elements of a contract, they can help ensure they also know what to do if they end up in the middle of a contract dispute.
Components of a contract
The components of a contract include:
- Offer and acceptance: a contract begins with an offer by one party, usually for goods or services, which may be accepted by another party. The acceptance must mirror the offer for a contract to be formed.
- Capacity: to enter into a contract, the party must have physical and mental capacity to do so.
- Undue influence and intent: the parties to a contract must have the intent to enter into a contract and intend for the contract to have legal consequences. There must also not be any undue influence in the formation of the contract.
- Form and legality: the purpose of a contract must be legal otherwise the contract may be considered void.
Dealing with a contract dispute
The components of a business contract can come into play in noncompete agreements, partnership agreements or other breaches of contract which is why they are important to be familiar with. There are different ways these types of contract disputes may be resolved and business litigation is one of the options but not the only option. Based on the needs and goals of the business, it is important to consider every option to resolve a contract dispute which is why businesses should be familiar with contracts start to finish.