Business contracts are a key part of making sure you get what you bargained for when you make a deal. Where in the past, many businesses could get by on a handshake, in today’s world, if you don’t get it in writing, then you may be setting yourself up for bigger problems down the road. This is why you should consider retaining the services of an experienced business contract attorney to assist you. Your lawyer can make sure that the contract you sign gives you what you expected, while also protecting you from potential litigation.
What are the Essential Elements of a Contract Under Pennsylvania Law?
Pennsylvania law requires a number of things to be present in a contract in order for it to be valid and binding upon the parties. First, it must have an offer and acceptance. An offer is where one party clearly makes a definite proposal to the other party. The party that has received the offer must clearly agree to the terms without any changes, alterations, or additions. If this happens, there is no acceptance but rather a counter offer. Keep in mind that you can have both sides offering something to each other.
The second condition is consideration. This means that each party must exchange something of value. While this is usually a good or service in exchange for money, you may also have both parties agreeing to provide goods or services, like in a barter.
The final element is mutual assent to the terms and conditions of the contract. This is also known as a meeting of the minds. Both parties must understand and agree to the contract as a whole. In addition, they must have the legal capacity to enter into a contract, which includes being over the age of 18, and the purpose of the contract must be legal and not violate a public policy.
What Common Clauses Will You Find in a Contract?
Almost all business contracts contain terms and conditions that set forth the purpose of the contract, its subject matter, and the things each party has to do to comply with the agreement. This will include a description of any goods and services provided by one or both parties, and the terms for payment. It may also contain a description of the goods, and any representations and warranties as to their condition, unless this is an “as is” agreement under which one party accepts the goods as they are without condition.
Contracts should contain language regarding when one of the parties breaches the agreement. This breach may be for failing to make timely payment, delivering inferior goods, or some other element. In some cases, a party that breaches an agreement will be given time to cure, with language saying “the party in breach will have 10 business days to cure the breach before the non-breaching party can terminate the contract.” There also may be notice language, which requires the non-breaching party to provide 30 days’ written notice to the non-breaching party. This will include a description of what happens when the agreement is terminated.
Some contracts contain non-disclosure and non-compete agreements. These usually appear in employment contracts and supply agreements, especially where one party is looking to protect its intellectual property or trade secrets. If a party is supplying a generic item, then these clauses are rarely needed. These will prevent the other party from using your proprietary information or competing with you in a specific area.
Other standard clauses include severability, which allows the contract to continue even if a term is deemed invalid or unenforceable. There is also usually a choice of law clause that determines which state’s law will be used to interpret the contract. This can be very important, since many states have different rules regarding commercial contracts. Finally, many contracts contain a choice of venue. If you are entering into a contract in Pittsburgh, you may want to consider having the case heard in a court located in the city.
What Language Can be Used to Enforce a Contract?
Enforcement is a key issue with any agreement. Unless there is proper language governing what happens in the event of a breach, then the contract itself may be unenforceable. Some key terms to consider include indemnification and governing law.
Indemnification is a requirement that one party is responsible for the potential damages and losses incurred by another if such party is in breach of the agreement. We often see these clauses used where a party acts on behalf of another, like a sports agent representing someone on the Penguins or Steelers. If the agent acts improperly and the player gets sued, then the agent will be responsible to indemnify the player, meaning that he or she will have to reimburse the player. It is important for an indemnification clause to contain language that says “including reasonable legal fees” so that the person who breached the agreement will have to reimburse the other person for his or her lawyer.
You can also have language that the prevailing party in a lawsuit is entitled to reimbursement for legal fees in addition to the award of any damages. Awarding legal fees to the winner is an incentive for the parties to resolve any disputes amicably without going to court.
This is why many contracts also contain alternative dispute resolution clauses, such as mediation and arbitration. Mediation is a process by which the parties will work with a neutral to resolve a dispute. The neutral tries to negotiate a settlement that both parties can live with. Arbitration is a binding process where the parties hold a hearing before a neutral private arbitrator who then rules on the dispute. Each of these tends to be less costly than a lawsuit, and facilitate the enforcement of a contract.
Contact a Pittsburgh Contract Law Attorney Today
Negotiating the terms of a contract is a vital part of doing business. It may seem like things are going well when you first meet the other party, but you want to make sure you are protected in the event that things go wrong. The experienced contract law attorneys at Jones Gregg Creehan & Gerace can provide you with the guidance you need to get an agreement that will deliver what you want while protecting your rights and interests. Contact us today for a consultation.