By Kevin Corlew, Principal Attorney and Founding Member, PathGuide Law LLC
Contracts are an everyday part of the businessperson’s life. Business relationships are governed by them. Some contracts are complex. Others are simple. Some are written. Others are verbal.
A contract is a legally enforceable promise. For example, a landscaping company may promise to maintain the lawn at your office building in exchange for your promise to pay for the work. Or an accountant may promise to do bookkeeping for a custodial company in exchange for cleaning services.
Whether a contract is enforceable (and whether it has been breached) will involve a variety of factors. The basic elements of a contract are (1) an offer; (2) an acceptance; and (3) bargained-for consideration (an exchange, such as one’s performance or a return promise). See Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661, 662 (Mo. 1988).
Missouri courts have also stated that the essential elements to a valid and binding contract are:
(1) parties competent to contract (i.e., adults of a sound mind);
(2) a proper subject matter (i.e., a legal purpose);
(3) a legal consideration (i.e., bargained-for exchange);
(4) mutuality of agreement (i.e., a meeting of the minds); and
(5) mutuality of obligation (both sides must give something).
See Bengimina v. Allen, 375 S.W.2d 199, 202 (Mo. App. 1964)
Now, having considered the legal requirements, a businessperson is also wise to consider that character matters. Your best chance for a successful business relationship is to deal with someone who is trustworthy. But even with agreements between two honest brokers, genuine disputes may arise. Thus, putting an agreement in writing at the beginning will protect both parties. A clear, written contract helps the parties understand expectations and avoid misunderstandings, know their obligations, resolve disputes more easily, and will increase the enforceability of the agreement.
A business lawyer will be able to review your existing contracts; advise on, negotiate, and draft new business contracts; seek enforcement of contracts; and, when necessary, litigate in court to seek remedies and compensation for a breached contract.
For more information on this article, please contact Kevin Corlew at kevin.corlew@pathguidelaw.com.