Those who own a business in Minnesota may wonder what needs to be included in a contract to use for their business dealings. A contract is a formal agreement between two parties. Though agreements used to be made verbally and sealed with a handshake, the trend now is to use written contracts. Contracts help protect both parties and can prevent problems from going to the courtroom.
Basics of an enforceable contract
As a business owner, you need your contracts to be legally enforceable. This means if a contract is broken (breached) it can be brought into a courtroom where the judge can rule for it to be enforced. For a contract to be legally enforceable it generally has to meet six requirements. These include:
- Offer: an offer must be made by both of the parties
- Acceptance: both parties must accept the other party’s offer
- Mutual acceptance: the contract must be signed of both parties’ free will without coercion or force
- Consideration: both parties must give something to one another
- Competence: both parties must be of a sound mind
- Legal purpose meaning that the exchange of both parties must not be for an illegal good or activity
Does my contract always need to be in writing?
In Minnesota, certain contracts must be in writing or they are not legally enforceable. This law is the Minnesota Statute of Frauds. Contracts that must be in writing include contracts that take a year or more, guaranties, marriage and bankruptcy agreements.
Getting help with writing and enforcing a contract
Modern contracts are extremely detailed. This is done to prevent a contract from being taken to court and litigated; however, it can make it difficult to write and understand. Getting help from a business & commercial law professional may help when making or signing a contract.