Just recognizing what something is not that hard. When it comes to legal documents, for example, you might recognize that the document before you is a contract. However, how will you know if it is a legally enforceable contract? No matter which side of the agreement you are on, it’s important to understand that the document you are signing can be enforced if necessary.
As an example, let’s consider Thomas and Jeremiah. They run a consulting company that provides computer and technology services to companies that can’t afford their own IT Department. As new business owners, they did not understand the importance of a legally enforceable contract – until they got burned by a bad client. They immediately asked their business attorney to draft simple contracts for them and to review contracts that were awaiting their signature. They needed to be reassured that the contracts were binding and enforceable.
To Be a Contract . . .
The simple definition of the word ‘contract’ is:
“An agreement between private parties creating mutual obligations enforceable by law.”
In Alabama, contracts should be in writing. However, under certain circumstances verbal contracts may be allowed.
Generally, legally enforceable contracts must include the following
Offer and Acceptance
One party to the contract makes an offer to the other, which is then accepted. However, in bilateral contracts, each party promises to do something for the other.
Consideration
This is payment from one party to the other for performing the contract. Consideration does not have to be cash, though. In fact, consideration can include real property, personal property, or an action.
Capacity
This refers to a party’s age or mental ability needed to enter into the contract. For example, someone below the age of 18 may lack the capacity to make the contract. A person who suffers from Alzheimer’s disease may also lack capacity.
Legal Purpose
The contract must have a purpose that is legal. A contract that requires a party to engage in illegal behavior is probably not legally enforceable.
Would You Know a Legally Enforceable Contract if You Saw One?
The attorneys at Miller Estate and Elder Law use their business experience to assist clients with contracts and more. For a free consultation with an experienced Alabama attorney, contact us at 256-251-2137 or use our convenient Contact Form.
We have offices in Anniston and Birmingham and serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.