Business Transaction Attorneys in North Haven, Connecticut
The lifeblood of any business is the relationships it establishes with customers or clients, and then just as importantly, with the other persons or entities who will help you run your operations.
If you run a store selling toys, for instance, you must have agreements or contracts with suppliers to bring you the products to sell. Even if you run a service business, you may have agreements or contracts with other entities for accounting and tax purposes, especially if you have employees.
If these agreements and contracts are not well prepared and executed, they can come back to bite you. You also must adhere to the principle of due diligence — making sure the person or entity with whom you entering into an agreement has a solid track record to back up their promises.
Though handshake agreements can take the form of a legally binding contract, the guiding principle in the business world is to get everything in writing. This protects you and helps clarify the obligations of the other party entering into the agreement, which becomes an express contract once it is put into writing.
If you are running a business or thinking of starting one in New Haven County, Connecticut, contact us at DeChello Law Firm LLC. We are prepared to help you review the documents surrounding your business transaction and put the proper legal safeguards in place.
Schedule a consultation with us today at our office in North Haven. Our team can help you create agreements in a legally binding format that protects you and your business against potential lawsuits.
Contracts and Agreements
Even the simplest of mom-and-pop operations will likely need to forge at least one agreement to keep their operations afloat, whether it’s with a cleaning crew that comes in at night to straighten the premises up or a paper products supplier.
At first blush, it may seem perfectly safe to do a handshake agreement with a cleaning crew for their services every night for a set amount of dollars. What happens, though, if they fail to hold up their part of the bargain — for instance, they consistently forget to empty desk trash cans or lock up behind themselves? You can, of course, just fire them and try to find someone else, but if they believe you and they had entered into a contract, they can legally challenge your actions.
While it may be an unlikely scenario that someone cleaning your mom-and-pop premises in an unsatisfactory way would turn around and sue you, it is, in fact, possible. Oral agreements are not enough to safeguard your business from a lawsuit. As another example, the supplier of toys for your toy store could file a claim saying you broke your oral agreement by moving on to another supplier with better products and prices.
Then there’s the flip side. What if the person you enter into an agreement with suddenly quits delivering on their promise to supply the promised products or services? You could soon have no products to sell or no one to clean the premises or handle your business’s taxes. You may need to hold them legally accountable.
Again, the best hedge against transactions going wrong is to get everything in writing, and not just in writing, but in clear, precise terms that are binding on both parties. This written agreement, in legal terms, is called an express contract. Both sides use it to outline their obligations and responsibilities.
Important Elements of an Enforceable Transaction
The elements of what comprises a business contract can be broken down in different ways, but in basic terms, five elements must be present:
OFFER: Someone or some entity must make an offer to another person or entity to do or refrain from doing something. For instance, your toy store makes an offer to buy X number of specified toys to be delivered every other Wednesday.
ACCEPTANCE: The other party accepts the offer. Of course, the next element is also a huge factor in whether an acceptance will be reached.
CONSIDERATION: In our toy store example, what will you as the toy store owner do if the offer is accepted? This will likely equate to a monetary exchange based on an agreed-upon formula. Other types of contracts might involve an exchange, services, or goods, but most times, monetary exchange is agreed upon.
MUTUALITY OF OBLIGATION: The terms cannot be drafted so that one party has the complete upper hand. For instance, the buyer (toy store owner) cannot include a right-of-cancellation clause without affording the same right to the supplier. If there is no mutuality, courts will be prone to find the contract invalid.
COMPETENCY AND LEGALITY: Both signing parties must be over 18 years of age and of sound mind when they enter into the agreement. One signee, for instance, cannot be high on drugs or alcohol. Nor can one signee be coerced into the agreement through threats or other actions. Finally, the agreement itself must not break the law. For instance, you cannot have a legally binding contract regarding the sale of illicit drugs.
What to Avoid: Common Pitfalls
The first thing to note is that even an oral agreement can contain these elements, and if it does, then it is a legally binding contract. The problem with oral contracts, however, is that, should the parties end up in court, both can claim a different understanding of the agreement. The case then becomes a variation of “he said/she said” with different parties playing opposing roles.
Also, a hastily drawn-up written contract can fail to clearly spell out the rights, obligations, and duties of both parties. If matters end up in court over a breach of contract, it may be hard to prove who damaged whom by which actions or inactions.
If your contract with a supplier calls for the delivery of X number of toys but does not specify when or how frequently, the supplier can claim in court that the toys were on their way at a later date, even if your store had run out of products to sell.
Business Transaction Attorneys in North Haven, Connecticut
Entering into agreements with other entities to help you run your business is not only vital, but also strewn with potential obstacles and misunderstandings. You need to move beyond the handshake phase to getting everything in writing. You want to avoid any legal actions, such as a breach of contract lawsuit, and the best way to do that is by starting off on the right foot and getting everything into precise language and terms. For assistance with a business transaction in New Haven County, contact our team of business law attorneys at the DeChello Law Firm LLC in North Haven, Connecticut. We can review any agreements you already have and assess any future agreements you’re considering to make sure they meet all legal standards and protect you and your business’s best interests.