Professional Contract Formation As a business owner you enter into a professional relationship with customers, vendors or contractors, on a regular basis. Contractual agreements are a fact of business, which also provide somewhat of a legal foundation that protect your business product, or service that you provide. In researching contracts, I discovered that not all contracts have to be reviewed by an Attorney to be a legal contract. Generally, to be legally valid, most contracts must contain two elements; 1. All parties must agree about an offer made by one party and accepted by the other. 2. Something of value must be exchanged for something else of value. This can include goods, cash, services, or a pledge to exchange these items. (Beesley, …show more content…
Once counteroffers are made, the legal responsibility to accept, decline, or continue to counteroffer then shifts to the original businessman who presents the initial offer. 2. The Importance of Exchanging Something of Value In addition to ensuring both business partners are in agreement on the terms of the offer, the second element that ensures a contract is legally valid is the exchange of something of value. The exchange of something of value is vital since it sets apart the contract from being a gift. The value exchange could be monetary, or a promise to provide a service in exchange for a service provided. Most business transactions are based on this exchange. Contract The type of contract I have chosen to use is a partnership agreement, a bilateral contract. The following example contract could be used with a small business who partners with someone who specializes in certain work. If were to partner with small local business to install an accessory, that I developed, to be mounted on the front of a Harley Davidson motorcycle, the following contract could be used. Partnership Agreement CAPACITY This partnership agreement is made this 23rd day of August 2015, by and …show more content…
Profits and Losses. The profits and losses of the partnership shall be divided by the partners according to mutual agreeable schedule, by either, cash not to exceed $250.00, or parts and/or service to Chris M. Worthington’s motorcycle. If Chris M. Worthington does not require parts and/or service for his motorcycle, the cash will be deposited into the capital account. At the end of the year the profits/losses will be divided according to the proportions listed above. 6. Terms/Termination. The terms of this agreement shall be a period of one year, unless the partners mutually agree in writing to different time period. Should the partnership be terminated by unanimous vote, the assets and cash of the partnership shall be used to pay creditors (if needed), or paid out to each partner as listed above. 7. Disputes. This partnership agreement shall be governed by the laws of the State of Colorado. Any disputes between partners as a result of this agreement. Shall be settled by arbitration in accordance with the rules of American Arbitration Association and judgment upon the awarded rendered may be entered in any court having jurisdiction thereof (McCarty, H., 2015). 8. Non-Compete Agreement. A partner who retires or withdraws from the partnership shall not directly or indirectly engage in business which is or which would be competitive with the existing business of McCycles Motorcycle
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
According to the Regs. §1.708-1(b)(4), if the partnership occurs such a Technical Termination, “The partnership contributes all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and, immediately thereafter, the terminated partnership distributes interests in the new partnership to the purchasing partner and the other remaining partners in proportion to their respective interests in the terminated partnership in liquidation of the terminated partnership, either for the continuation of the business by the new partnership or for its dissolution and winding up.” Thus, it becomes a deemed new partnership.
In order to have a valid contract, there are six elements that need to be established. The following is a defined list of these elements, as well as analysis pertaining to the case at hand.
-up to the individual to decide whether they contract or not and on what term (McMillan)
In analyzing the various facets of these two cases, we must first look at the arrangement between Mr. Sam Stevens and the store to determine if, in fact, a legal contract was at hand. The first necessary element in a contract is the agreement. An agreement is reached when one party makes an offer, and the other party accepts. In this case, the store offered to purchase 1,000 units of Mr. Stevens’ product, his verbal assent to the store manager constitutes an acceptance of said offer.
1.The requirements for a legally binding contract are (1) offer; (2) acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, in certain circumstances, (6) a written instrument. 2.The mirror image rule is a contract law that provides that an offer by the offeror must be accepted exactly and without any modifications by the offeree in order for there to be an enforceable contract. The common law follows the
Contractual agreement has always been viewed in terms of offer and acceptance. The universal principle to contract law has always been parties may get into an agreement in whichever way they deem fit and they are subject to certain terms as they choose. As far as legal requirements vital to their formation are binding contracts may be formed. Moreover a binding agreement may be manifested in terms of writing or in verbal form.
There are three basic essentials to the creation of contract which will be recognised and enforced by the courts. These are: contractual intention, agreement and consideration.
A contract is an agreement which has its specified terms and conditions between two or more parties in which there is a promise to do something in return for a benefit.
A contract is an agreement between two parties in which one party agrees to perform some actions in return of some consideration. These promises are legally binding. The contract can be for exchange of goods, services, property and so on. A contract can be oral as well as written and also it can be part oral and part written but it is useful to have written contract otherwise issues can be created in future. But both the written as well as oral contract is legally enforceable. Also if there is a breach of contract, there are certain remedies for that which are discussed later in the assignment. There are certain elements which need to be present in a contract. These elements are discussed in the detail in the assignment. (Clarke,
Deciding how important decisions are made is crucial in any business structure, but even more so when there is more than one owner. Therefore, the partnership agreement mandates how the owners will make decisions by either unanimous vote or by majority vote. Capital contributions include funds provided by the partners to be utilized in the business. The partnership agreement dictates how much each partner will contribute to the business as well as plan for future financial obligations. Salaries and distributions are often classified as partner withdrawals and profit/loss allocation. The partnership agreement establishes when money is available for withdrawal and how much of the profits and losses are allocated based on capital contributions. All business entities should be prepared for worst-case scenarios involving death, disability, and dissolution. Deaths and disabilities are untimely, so the partnership agreement outlines who inherits the partnership’s assets through trusts and wills. Dissolution is never a pleasant topic to think about in the beginning, but it is essential nonetheless. The section inclusion in the partnership agreement enables the partners to be prepared in the event that a dissolution does occur (Neville
One of the last remaining strongholds of classical contract law is the notion that contracts require offer and acceptance therefore, in order for a contract to become binding, offer, acceptance, consideration and intention to create legal relations must exist. However contracts are formed in different ways for each different circumstance. (Shawn Bayern, Offer and Acceptance in Modern Contract Law: A Needles Concept, 103 Cal. L. Rev. 67, 102 (2015)
A valid contract is an agreement including promises made between two or more parties with an intention of certain legal rights and legal responsibility that are enforceable. For there to be a contract – that must contain four essential elements- offer, acceptance, intention to create legal relations and consideration.
Occasionally there may be misunderstandings made by individuals/parties in differentiating between a simple contract and a speciality contract. From what is understood, a speciality contract may be; “illustrated by reference to gifts”, as stated by (Richards, 2009).
The area of law that is required in order to form a legally enforceable contract is agreement.