Contracts are the lifeblood of commerce. While an optimist might say that contracts are how people and businesses know they can rely on the agreements of others, a pessimist might counter that contracts are confusing and full of fine print and traps for the unwary. Looking more closely at contracts, both can be right.
At root, a contract is just a voluntary agreement that is legally enforceable. They can be written or oral, long or short, and even express or implied. However, all contracts must contain a few things to be legally binding, including:
- An offer made by one party – a promise to do something in exchange for the other party’s promise or action;
- An acceptance of that offer by the other party; and
- The exchange of consideration – another word for something of value (the promises or acts) to be exchanged.
Contracts are an important part of everyday life. If you or your business is stuck in an unfavorable contract or you think someone has breached a contract you have with them, call the Denver commercial litigation lawyers at Burg Simpson at 303-792-5595 so we can discuss your case with you.
Types of Contracts
Contracts come in different shapes and sizes. While they all need to have the required elements, beyond that they can vary widely. While most contracts are signed and agreed to in writing, that’s not always the case. And, even if they’re written, contracts they will still be very different: a contract can be handwritten on a single piece of paper (for example, a purchase agreement between friends for a used car) or it can be dozens of pages long and incorporate other documents and schedules. Common contracts for individuals range from an apartment lease to a credit card agreement to an agreement to have your house painted or lawn mowed. Common contracts for businesses range from vendor or subcontractor agreements to purchase agreements to advertising agreements.
Contents of Contracts
Beyond the required elements, contracts can include a variety of provisions – each of which can fundamentally change the agreement and must be carefully considered. This is the “fine print” that people commonly (but shouldn’t!) race past. For example, some important examples of contract provisions include:
- Arbitration agreement: An agreement to arbitrate means that if there is a dispute, it will not be heard in court or in front of a jury, but instead in front of a private arbitrator. The proceedings may or may not follow what would be done in court, they may be confidential, and you may have very limited rights in the arbitration or to challenge the arbitration award.
- Confidentiality agreement: A confidentiality provision means that the contract, or certain parts of it or certain kinds of key information, are confidential and cannot be made public. There could be an agreement for specific payments or injunctions if this is breached.
- Attorney’s fees and costs: An attorney’s fees and costs provision means that if there is a dispute, the losing party must pay the other’s legal costs. Depending on the dispute, these fees and costs can be very expensive and may, in reality, be a bar to challenging the other parties’ conduct.
- Forum selection and choice of law: These provisions may select the law of a different state or may agree that disputes must be heard in a different state.
- Liquidated damages: These aren’t always available, but where they are, a liquidated damages provision means that there is an agreement to pay a certain amount of damages if the contract is breached.
What’s not included in the contract can be as important as what is. The slightest omission can leave you or your company vulnerable to litigation. That’s why it’s critical to rely on the expertise of a skilled Colorado commercial litigation attorney when you have questions or concerns about a contract. Get help today by reaching out to Burg Simpson right away at 303-792-5595.