Commercial Lawyer Brisbane
Contracts
Understanding Contracts
Contracts may be taken for granted as a universally understood concept, but it is important to be familiar with their elements as contracts can play a vital part in many situations related to commercial law.
What Constitutes a Contract?
Contracts are traditionally written, either digitally or on paper, as a preferred format for irrefutable evidence of the agreement between parties. Many law firms and legal advisors will prefer for business dealings to be conducted via written contract, as it serves a record of what was agreed and therefore reduces the risk of a dispute surrounding payments, time frames and work to be performed.
Contracts can come in the following forms:
- Verbal contracts. These contracts may cone in the form of handshake agreements and are only recommended in situations where there are no disputes. Verbal contracts can lead to uncertainty but can potentially be enforced by a court.
- Part verbal, part written contracts. Verbal contracts are often supported by paperwork like emails, quotes or a list of main points relating to the agreement. Any paperwork associated with the initial agreement can be used later in discussions when trying to resolve a problem.
- Standard form contracts. A standard form contract is a pre-prepared contract where most of the terms are set in advance. These contracts require little to no negotiation between the parties and are often printed with a few blank spaces for filling in information such as names, dates and signatures. Standard form contract may also include legal ‘fine print’ and terms.
Breaching a Contract
If agreed-upon conditions are set out in a legal contract which is then signed, all parties are required to fulfil the requirements outlined in the contract. Most contracts are enforced in court so if the other party breaches the contract, you can go to court to try to collect damages or obtain ‘specific performance’. However, a court will not enforce it if the agreed sum is significantly greater than the cost of the damage and considered unacceptable.
Quality Control When Signing a Contract
- Be sure to take the time to understand a contract’s implications. This means reading its contents and seeking legal advice on any areas which are unclear or potentially worded in a manipulative way. It is not wise to sign a contract until you completely understand its meaning;
- Ensure the contract’s final page is signed and dated by all necessary parties;
- Ensure each page of the contract is initialled and dated by all necessary parties;
- Ensure all pages, especially pages that require signatures or contain vital details, are numbered and in order;
- Be sure all warranties etc. that are incorporated by reference are attached to the basic contract; and
- If the contract is a form contract, ensure that every entry is appropriately and correctly filled out – do not leave gaps; use ‘N/A’ (Not Applicable) if the space does not apply.
If you need assistance with developing a business contract or need a professional opinion before signing, contact the commercial law experts at Commercial Lawyer Brisbane today.