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?
What makes a contract effective?
Four things a ‘good’ contract should include
- An offer and an acceptance
- A price that is “equal measure” to the value given (reasonable or sufficient value)
- The ability of both parties to enter an agreement
- 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.