The Basics of Business Contracts | Alexandria Business Lawyer | Kamerow Law Firm
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The Basics Business of Contracts

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Alexandria, VA 22311
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High school sweethearts might break romantic promises to one another with no legal ramifications, but when people or business entities enter into contractual agreements, the law enforces performance of those promises. Business contract laws have been crafted to prevent the harm created by broken promises. Modern businesses would be unable to conduct everyday affairs without the binding force of contracts through which they can count on performance by those who promise it.

Consider a construction firm that builds a house for a customer. Pursuant to good planning, the firm contracts with a supplier of lumber to take delivery of a predetermined amount of lumber and on a predetermined date and time, necessary for the construction of the house. If the supplier fails to deliver the wood, the construction company cannot profit by building the house, and the customer in turn, will not have a house in which to live.

When is a contract formed?

A contract is formed at the intersection between offer and acceptance, or in other words, upon the agreement of offeree and offeror. There are four elements to a legally binding offer.

  • Commitment – Must involve language that reasonably induces the offeree to believe that the offeror will uphold the terms in the offer.
  • Definite Terms – The offer must contain definite terms regarding the money, property, or services involved.
  • Communication – Although it may seem repetitive, a basic element of a contractual offer is communication of that offer to any party accepting the offer. If one who returns a lost dog is not aware of the offer of a reward for the return of the dog because he did not see the offer in a sign or newspaper, the contract does not exist at the time of performance and the one who returned the dog would not be entitled to a reward.
  • An identified offeree – The contract must specify a party or parties to whom the offer is being made. In the case of the offer for the lost dog, which is a unilateral offer, no contract exists until the finder of the lost dog communicates with the reward-offering owner, and then the finder, himself, becomes the offeree of the contract.

Consideration

For a promise to be legally binding, even under the satisfaction of the above, it must involve some form of consideration in return. This means that the promise must involve a tradeoff between offeree and offeror so that the promisor incurs some form of detriment and at the same time, receives something beneficial in exchange. In the case of the lumber company promising to deliver the building materials, the payment for the wood constitutes consideration while the relinquishing of the materials constitutes detriment.

Get Legal Assistance

People can be unreliable, but contract laws are put in place so that the promises they make do not have to be so. If you or a loved one is involved in a dispute centering on a contract, whether written or oral, protect your rights. If a promising party fails to perform, you might be entitled to compensation for damages arising out of the defaulted promise. Contact the attorneys at The Kamerow Law Firm, PLLC for a free and confidential consultation by calling 703-370-8088.