What is the most common type of business law case?

On Behalf of | Oct 20, 2021 | Uncategorized

The most common reason for business litigation is breach of contract. Why? Because contracts are the foundation of any operation. One party’s failure to follow through on their end of the bargain can bring business to a halt. Conversely, one party demanding more than what is promised can have a negative, if not debilitating, effect on profits. So, it makes sense that disputes over contracts would be the No.1 reason for litigation.

Why have a contract?

Businesses need to remain viable and profitable. Without a recording of the transactions that the business operations are based on, there is no formal agreement;  no foundation for the business’s operations. Once signed by both parties, an agreement is both formal and legally binding. A contract sets the framework that both parties agree to work within; virtually a set of laws to which both parties are bound.

What makes a contract effective?

An effective contract clearly defines the liability of each party. This means that each party can readily determine who is responsible for what, when, how and potentially why. The scope of the agreement, as well as the conditions of the agreement, should be laid out. what happens when the contract is broken should also be included in the contract. If this is not done, it will be left up to the court to decide.

Four things a ‘good’ contract should include

To protect your business, ensure that every contract you either create or agree to has these four elements:
  1. An offer and an acceptance
  2. A price that is “equal measure” to the value given (reasonable or sufficient value)
  3. The ability of both parties to enter an agreement
  4. Mutually agreed upon obligations that are enforceable

What are the most common types of business contracts?

Business contracts vary in type and scope. Most business contracts relate to sales, employment or day-to-day functions (general business). Common business contract types include:

  • Nondisclosure and noncompetition agreements
  • Partnership agreements
  • Bill of sale
  • Promissory note
  • Property and equipment leases
  • Contractor agreements
  • Indemnity agreements

Contracts can often make or break business deals. Even the most basic of contracts may have nuanced liability. One more reason to make sure you understand every aspect of any contract you sign.