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Understanding The Basics Of Contract Law And Essential Terms Business Owners Should Know

contract law

Drafting contracts is essential to growing a business. They outline rights, obligations, and responsibilities during a legal business transaction. However, not all contracts are created equal, and essential elements should be included for the agreement to be legally enforceable.

Hiring an attorney experienced in contract law ensures that your contract is watertight and that all terms are interpreted and understood correctly. We’ve put together a few of the most common phrases to help you get started.

What Is Contract Law?

contract law

Contract law is a branch of law that governs the agreements between two parties in a transaction. In the business landscape, a legally binding agreement follows the rules outlined by contract law.

Contract law is applicable in various business circumstances, from establishing business partnerships and forming employment relationships to finalizing real estate transactions and confirming international trade deals.

Business transactions need to consider state-specific regulations outlined by contract law of the jurisdiction. For example, Florida contract law outlines a different statute of limitations for contract disputes from New York.

Main Terms In Contract Law

All business transactions that involve contracts use the same terminology, with the following terms being the most essential.


An offer describes the proposal outlined in the contract and indicates a desire to enter a contractual agreement. The offeror puts it forward to the offeree.

An offer has a few key elements, such as intent, a clear definition of terms and conditions, and revocability (unless the offer is irrevocable).

While most contracts include an offer, the nuances may differ, and there are different types of offers to consider. For example:

  • A non-binding offer describes a revocable offer that can be withdrawn before a binding offer is legally formalized.
  • Quid pro quo is often associated with an offer, suggesting that each party should bring something to the table
  • A counteroffer is a response to an initial proposal, suggesting different terms and conditions
  • A firm offer is an irrevocable offer for a set period of time


The deal is accepted when one party agrees to the contract’s terms, as set forth by the offeror or as mutually agreed to by all parties. In other words, there must be a meeting of the minds. The concept of acceptance can be judged objectively. Depending on the circumstance, it may be expressly stated or implied. To avoid any confusion or future issues, it’s best to have written acceptance.

While oral acceptance is acceptable in some situations, written acceptance is advisable and legally required in others. For example, contracts enforceable under the Statute of Frauds, complex contracts, legal requirements, and when focusing on risk management.


Consideration is another necessary element of a legally enforceable contract, describing what a party gets out of the contract. Essentially, consideration is something of value that is given in exchange for another. For example, exchanging money for goods or services.

Consideration describes the promise put forward by both parties, whether it be a certain level of performance, money, or legal value. By including consideration, the contract is differentiated from a gift or hypothetical promise.


Capacity describes the legal and mental competence required to understand a contract and agree to the terms willingly. If one (or both) of the parties lack capacity, then the contract could be difficult to enforce.

There are different forms of capacity to consider, such as legal age and being sound of mind. Intoxication and legal status are other factors that could impact capacity. For example, corporations must have the legal capacity to enter into a contract and comply with legal formalities.


A contract must be consistent with the law of the jurisdiction and observe the state’s requirements. All contract details, including the actions or obligations, must be legal and not violate any public policy.


When someone signs their name on a contract, they confirm that they have read the proposal and agree to the terms and conditions. They verify that they are of legally sound mind and that they are willing to uphold their side of the deal.

A signature represents more than a handwritten name or mark. Instead, it binds the individuals to the contract, indicates the intent to follow the terms, authenticates their identity, formalizes the agreement, and confirms their legal capacity.

Additional Contract Law Phrases

In addition to key phrases, other phrases are used relatively often, depending on the circumstance. For example:

  • Mutual assent – the unanimous agreement of all parties involved in the contract
  • Implied terms – words or phrases assumed to be included in a contract but are not expressly stated
  • Express terms – a verbal or written wording that is clearly stated in the contract
  • Breach of contract – the failure to deliver according to the terms of the agreement without a legal excuse
  • Remedy – a court-ordered resolution that provides legal or equitable relief to a party in the instance of a breach of contract
  • Assignment – transfer of rights or obligations from one party (the assignor) to another party (the assignee)
  • Voidable – a voidable contract is subject to be invalidated if one party chooses (due to legal reasons or defects)

Benefits Of A Contract Lawyer

Even with the confidence boost of understanding these terms, a contract lawyer offers practical help and expertise. Rather than navigate the legalities of business contracts and risk making expensive mistakes, a contract attorney provides these benefits.

  • Experience and expertise in drafting and negotiating contracts, ensuring that the final document is watertight and protects your interests.
  • Mitigate risks by identifying potential liabilities in contracts, reducing the chance of the business being exposed to legal disputes or financial losses.
  • Tailor agreements to meet the specific needs of the business, ensuring that all unique circumstances are addressed while meeting regulatory requirements.
  • Strong negotiation skills to argue for the best terms and conditions and secure favorable outcomes for your business.
  • Assistance with conflict resolution in the circumstance that a contract is disputed or breached.

Expert Contract Lawyers For Your Business

The law offices of Gary I. Handin have been serving the Coral Springs area since 1969, offering our expertise in contract law to businesses of all sizes. Whether you’re negotiating a complex business agreement, drafting employment contracts, or leasing real estate, we are a phone call away.

Contact us at 1-877-815-4560 to find out more.

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Law Offices of
Gary I. Handin, P.A.

Providing professional legal services for the city of Coral Springs. Contact us today for a free consultation – 954-796-9600.

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