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What are the Essential Elements of a Contract?

November 27, 2020

Business owners have relationships with many different companies and parties. Many of these relationships are ongoing and include contracts for services or goods. A contract is a legal document between two or more parties. It is best to utilize a written contract to avoid problems later on. Businesses of all sizes utilize contracts on a regular basis with suppliers, landlords, customers, employees, delivery companies, and others. Contracts are important and you need to rely on these documents to protect you in a transaction.

Essential Elements of a Contract

In order for a contract to be legally binding, it must contain several essential elements. The contract must include an offer, acceptance, and consideration. The offer provides something of value from one party to the other and must be clear and concise. Consideration is a legal term that means one party provides something in exchange for something from the other party. In most cases, one party provides goods or services in exchange for monetary payment. Both parties must accept the contract, which shows that they had a meeting of minds regarding the issues of the transaction.

Remedies for Breach of Contract

In Wisconsin, both parties to a contract are expected to utilize good faith and fair dealing, which is implied in all legal contracts. Both parties have an obligation and responsibility to fulfill their part of the bargain. A contract should include details for how parties are to handle a breach. When one party fails to perform their obligations as part of the contract, the other party has the right to seek a remedy. Often, a remedy may be to seek monetary damages, although it may also include a specific performance. Some contracts require parties to participate in specific actions such as mediation or arbitration.

Ensure Legally Binding Contracts

Whenever you enter into an agreement, it is best to formalize it with a written contract. Although verbal contracts can be enforced, it is always best to protect yourself with a written document. Avoid template contracts because they may not address all of the necessary concerns and might not protect you in case of a problem. If you are presented with a contract to sign, review it thoroughly before you agree. Remember that you can request changes if the contract does not provide you with adequate protections. Never sign a contract until your attorney has had time to review the document. When you are entering into an agreement with another party, your attorney will draft a fair and legally binding contract document that you can sign with confidence.

What to Do About a Breach of Contract

When someone fails to do what they were supposed to do as part of a contract, you have some options. Review the document to determine the path that is available. In some cases, you simply want the other party to finish the work they promised. If the other party fails to complete their part of the contract, you may want to cancel the contract and get your money back. Know your exposure before you enter into a contract or provide payment or partial payment for services. Consult an attorney to find out what your options are in the case of a breach. If the other party fails to comply, you may need to take legal action.

To get help drafting and enforcing contracts, contact our legal team at Moen Sheehan Meyer, Ltd. online or by phone at (608) 784-8310.

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