Entering into an agreement with another business or an individual is often an essential part of running a business. However, there can be complications when it comes to enforcing a contract or pursuing legal action for a breach of contract. One of the best things a California business owner can do comes well before there are any issues. When drafting a contract, business owners should be sure that it will be enforceable in the future.
Establishing the agreement as a contract
While it might seem silly, one of the most important steps is to clarify that an agreement is a contract. In a valid contract, one party makes an offer that another party accepts. This offer should include something of value that is given for a promise. It is also helpful to clearly state within the document that it is a contract, as this should eliminate any ambiguity on the matter.
Additional considerations
A judge will take many factors into consideration when being asked to enforce a contract. For example, he or she may look at both parties’ capacity to contract, which refers to whether someone is legally capable of entering into a contract. Minors or those with mental impairments may not have the capacity to contract, rendering a contract unenforceable. Other factors a judge will look at include:
- Potential undue influence or misrepresentation
- Unconscionability
- Mistakes
Enforcing contracts can be vital to a business’ overall health and growth. Unfortunately, even contracts that appear valid at face value may be difficult to enforce. Before a California business owner ends up in a situation in which he or she cannot enforce a contract via a breach of contract lawsuit, it is a good idea to first carefully review the terms of the agreement under the guidance of a knowledgeable attorney.
