Virtual General Counsel LLC
Virtual General Counsel LLC

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The elements of a basic contract

| Dec 30, 2019 | Contracts |

Contracts are an essential component of many business relationships. When a small Colorado business chooses to hire a new employee or work with a new vendor it will likely create and execute a contract to govern the terms of their relationship. Contracts, also called agreements, are based on an offer and an acceptance of the offered terms.

A party can offer to do or not do something to form the basis of a contract. The party that has received the offer can accept it outright, reject it or may counter-offer modified terms to the offering party. When a party agrees to accept an offer, it must offer valuable consideration – often a payment in the form of money – in order to secure the terms of the agreement.

At their core, contracts are offers, acceptances and consideration. Depending upon the type of contract that is being created, additional terms may be incorporated as well. Employment contracts may detail benefits, time off, causes for termination and other important employment details, while a construction contract may discuss materials to be used, how sub-contractors will be brought in and penalties for breached terms.

When a party fails to meet the terms of the contract that they make then they may be accused of breaching their agreement. A breach may result in monetary damages or other penalties to protect and make whole the aggrieved party. It is important that businesses get the terms of their new contracts right the first time and, for this reason, it is often the case that businesses choose to work with knowledgeable business law attorneys to prepare their critical documents. Contracts form the backbones of business relationships and should be prepared with sound legal guidance.