Business Contracts – What You Need To Know!

If you are in business or contemplating going into business, you need to have an understanding of Contract Law and have a trusted advisor who can check all contracts before you sign them.

Your contracts are likely to vary from leases, employment contracts, credit applications to Service Level Agreements, Supply Agreements and more.

If you are a partnership or company, you will likely need Partnership Agreements and associated documents.

A contract is a binding legal agreement between two or more people (natural or juristic (being companies or trusts)) that can be enforced legally with legal remedies.

These contracts regulate the business relationship between the parties and what rights and responsibilities there are and with whom they lie.

Requirements for a Legally Binding Contract

Contracts are complex and it is always better to engage an expert or trusted advisor to draw it and also check if before you sign.  You need to ensure not only that all your rights and interests are fully protected, but that you understand precisely what you are signing.

Legally binding contracts must contain four important elements:

  1. A clear offer.  This defines what is proposed and what the terms of performance are;
  2. An acceptance of the precise terms of the offer;
  3. Both parties must intend to create a legally binding contract;
  4. The “consideration” must also be specified eg. cost.  This can take the form of money, items, services, actions etc.

What you need to know:

  • Ensure the parties are properly defined – is it you or your company contracting?
  • Have the contract in writing!  As much as this may not in every case be a legal requirement, it certainly is worth its weight in gold if there is a dispute or miscommunication later.
  • Have a non-variation clause in written contracts so that no verbal representations vary the written agreement

Contact: Charmaine Schwenn

031 003 0630 / 083 789 7638

charmaine@schwenninc.co.za

www.schwenninc.co.za