Contacts are often necessary for businesses, freelancers, and large purchases, but they can get tricky when not created or handled by a professional. Signing a contract can be scary, especially if it is filled with legal jargon or confusing language. How can you know if your contract is legally binding? Most contracts are legally binding, meaning that if you do not fulfill the agreement or complete services, you could face legal consequences. Violating a contract can result in jail time, court hearings, fines, or license suspension.
This article will share different elements of a contract and how to spot when a contract is legally binding. Not only will you want to know if a contract is binding for your personal safety, but this can also be helpful if you are someone who drafts contracts for your clients or customers.
Elements Of A Contract
One of the easiest ways to determine if you have a legally binding contract is to look for the following elements:
- Offer: Terms and conditions
- Capacity: Your ability to understand and sign the contract
- Awareness: Both parties have to be aware of a contract taking place (meeting of the minds)
- Acceptance: Does everyone agree to the terms in the contract
- Legality
- Consideration: The exchange of goods or services
- Mutuality: Both or all parties are bound by the contract
If any of these elements is missing from the contract, or is not completed (an underage person signs, or the services are not provided by either party), the contract will be considered unenforceable in a court. Make sure your contract has all of these elements and is looked over by a lawyer before presenting it to another party to sign.
When Does An Informal Contract Become Binding?
When an informal agreement contains an offer, acceptance, and consideration is present. Even verbal or informal agreements can be legally binding if one party can prove that these elements were present. It can be tricky to prove that these elements were present to a court, though. Courts will typically look at preliminary conversations you had to determine if, from these conversations, the parties intended to enter into legal obligations.
Is Your Verbal Contract Legally Binding?
Similar to informal contracts, verbal contracts can often be considered legally binding if taken to court. Because there is often no physical proof of a verbal agreement, it can be difficult to take the situation to court. While verbal contracts can often be seen as legally binding, agreements involving real estate or agreements that can not be completed in a year must have a written contract to be enforceable.
If you want to avoid costly legal fees and headaches in the future, it is best to draft a written contract. Not only does this ensure that you get your completed service or monetary payment for your work, but it also provides you with physical evidence, if criminal or legal action needs to be taken.
Does It Need To Be Notarized To Be Legally Binding?
Generally speaking, signatures of both parties are enough to consider a contract legally binding. Notarization is not needed for most contractual agreements if both parties enter into a contract on their preferred terms. A notary will physically witness a person signing their name to a document, so this can help a great deal if the contract needs to be disputed later. However, most business agreements don’t require a notary, because there is a mutual understanding that a service will be completed and payment will be provided.
Contracts entered into between friends, unconnected parties, or partners could benefit from notarization. Saving yourself the hassle of trying to prove a party signed the contract down the line may seem appealing if you are working with an unreliable person. It is important to note that contracts that are signed by both parties ARE legally binding, whether a notary was present or not. The notary helps to provide further proof during court proceedings.
Legal Expertise From WW Partners
WW Partners has some of the top legal experts in the state of Utah. We offer business litigation, contract disputes, intellectual property law, and much more. Our team of professionals wants you to feel confident in any legal or contractual obligations you may face. Whether you are an individual or a thriving corporation, our lawyers are with you every step of the way. Reach out to us to set up your first meeting and start on the path to better business dealings.