A well-written business contract captures the essence of the agreement, clearly defines each party’s rights and obligations, addresses major contingencies, and helps avoid future lawsuits.
A contract is a formal agreement between two or more parties involving mutual obligations to the other. For a contract to exist there must be a meeting of the minds,” that is, all parties must agree about all material terms of the contract. In addition, the parties must exchange consideration–something of value–whether in the form of money, goods, services or other valuable item. The amount of consideration need not be substantial in relation to the value of the overall contract.
A counter-offer amounts to a rejection of the previous offer and an offer of a new agreement with different terms. All terms of a counter-offer must be accepted by the other party in order to form a contract.
It is generally advisable to include a mediation or arbitration clause in all major contracts. These alternative dispute resolution (ADR) procedures tend to help resolve disputes more quickly and at a lower cost than litigation. Costs of ADR are usually shared equally by both parties. Mediation is generally less formal and less expensive than arbitration, but is non-binding. Arbitration usually allows for discovery and may include detailed factual findings by the arbitrator if both parties so agree.
Damages for breach of contract may include liquidated damages, which are pre-determined penalties specified in the contract. Compensatory damages are court-ordered damages designed to put the non-breaching party in the position it would have been in had the other party honored the contract. In certain cases, exemplary and/or statutory damages make also apply.
All important business contracts should be drafted and reviewed by an experienced business contract attorney. Denver Business Lawyers have been negotiating and drafting business contracts for individuals and businesses since 1997. Call us today at 303-502-9600 for a free consultation about your business contract issue.