Statistics show that there are over 1 million businesses in Canada that manage employees. Each of these businesses has had to sign a business contract of some sort while it's been in existence. In fact, it's probably been a party to hundreds of contracts, even if it does not recognize them as such. Every time you enter a contract, you expose yourself to the requirements of contract law. If you breach a contract, the other party becomes entitled to legal compensation from you.
Read on to learn more about business contracts and how to make sure you stay on the right side of the law in Toronto.
WHAT IS A BUSINESS CONTRACT?
A business contract is essentially a promise made between two parties (a business with another business, a business with a client, or a business with an employee) that is enforceable by the law. If a court decides that you have broken such a promise, they can make you meet the terms of the agreement or compensate the other party financially.
ESSENTIAL ELEMENTS OF A BUSINESS CONTRACT
Not every promise that one person makes to another can be said to have legal enforceability. The three following elements must be present in any legally valid contract.
OFFER
The first step in any enforceable business contract is a valid offer, whether of goods, services, or payment.
An offer is to be distinguished from an invitation to treat. The latter is merely a statement of fact that may or may not invite an offer. Different jurisdictions have different rules on the point at which goods on sale in a store are the subject of an offer.
ACCEPTANCE
When one party makes an offer, the other party must accept. It would not be legally permissible for someone to be bound by a contract if they did not enter willingly.
However, acceptance does not need to be written. In some circumstances, for instance, a party can verbally accept payment for something. There are various scenarios to consider like if the party was in the right state of mind to accept. Because every situation is different, you'll need capable legal counsel to discern whether there has been acceptance in your case.
CONSIDERATION
An offer and its subsequent acceptance are not sufficient to make a valid contract. In order for a court to enforce a promise against one party, there must be consideration, which means that the two parties must exchange things of value in respect of the promise.
The classic example here is money in exchange for goods or services. However, money does not need to be involved for consideration to apply. Many promotional offers that do not require customers to pay for something financially have been deemed valid contracts.
FULFILLING YOUR CONTRACTUAL OBLIGATIONS
Involving yourself in a business contract can seem like a daunting prospect if you've never done it before. However, contracts are a vital part of the commerce world, and it is important to become comfortable with them if you're not already.
If you need help acclimatizing to contract law, we can help. Contact our business lawyer today to discuss how we can help you draft the perfect contract, or settle a dispute arising from one.