A brief description of the factors that should be considered when drafting a settlement agreement.
[column width=”1/1″ last=”true” title=”” title_type=”single” animation=”none” implicit=”true”]
Many of us had a time that we pondered whether we should retain an attorney in order to resolve a conflict that we are facing or draft a contract. With respect to contract drafting, retaining an attorney can be costly, and thus, people often resort to drafting their own. They often do so by finding a template online, and then modifying the template to incorporate specific terms that are applicable to them. The result is sometimes satisfactory, but sometimes it is not. Unfortunately, the later happens frequently.
A client approached me last week to assist with a potential breach of contract claim. The client had lent a “friend” money, and the “friend” had promised to reimburse the client the entire amount borrowed, plus interest. But, you guessed it, the “friend” did not pay back the promised amount. The document that my client relied on for her potential breach of contract claim was a written contract that the parties had drafted themselves, without the help of an attorney. The result? One big disaster. The contract was not an enforceable contract, meaning that the client could not recover her money back based on the written agreement that she though she had.
What Are the Requirements of a Contract?
There are three (3) requirements for every contract: 1) offer, 2) acceptance, and 3) consideration. The following is a brief explanation of each:
- Offer – One of the parties made a promise to do or refrain from doing some specified action in the future.
- Acceptance – The offer was accepted unambiguously. Acceptance may be expressed through words, deeds or performance as called for in the contract.
- Consideration – Something of value was promised in exchange for the specified action or non-action. This can take the form of a significant expenditure of money or effort, a promise to perform some service, an agreement to refrain from doing something, or reliance on the promise. Consideration is the value that induces the parties to enter into the contract.
In addition to the following three (3) requirements, some contracts must also be in writing. For example, all contracts for the purchase of real estate and for rent of a property for more than one (1) year must be in writing.
What If the Contract Does Not Meet Those Requirements?
If a contract does not meet the above requirements, it may not be enforceable in a court of law. This means that if you ever have an issue with the terms of the the agreement, or the other party fails to perform according to the agreement, you will have a hard time trying to prove that a contract in fact existed. You may also have difficulty in seeking damages for the breach. Contracts are very important, as they are often the only evidence of a promise by one party to another. No matter how big or small the subject of the contract is, you should have a professional take a look at it.
What Should You Do The Next Time You Need a Contract Drafted?
Retain an attorney to either draft the contract for you, or review the contract that you drafted yourself. If you need assistance with a contract, KatzLaw is here to help you! Contact us now and speak to our attorney.
Call (844) KATZ-LAW before it is too late!