Important Terms and Conditions in a Contract
A guide by The Rozhik Law Firm
In many contracts or agreements, there are concrete terms and conditions that both parties must agree to. This article will assist your understanding of standard terms and conditions in contracts. Read on to find out what you should include in your next agreement.
What are the Essential Provisions of a Contract?
The fundamental elements required for the agreement to be a legally enforceable contract are an offer, an acceptance, mutual consideration, mutual obligations, and the capacity to form a legally binding contract.
A contract is an agreement between two or more parties that creates mutual obligations. These reciprocal obligations are then enforceable by law.
What are some examples of Terms and Conditions in a Contract?
- Breach of Contract
In some contracts, you may encounter a breach of a contract section. Breach of Contract is a direct or indirect violation of any agreed-upon conditions and terms in a binding and enforceable contract. “Not knowing” does not constitute an excuse for a breach of contract issue. For example, a non-compete agreement may be considered a breach of contract to solicit clients within a ten-mile radius of a previous job. If the employee who signed this contract accepted a new client within seven miles of their last position, they would be in breach of the contract. A breach of contract could also appear much more straightforward- like a missed payment or a missed service delivery deadline.
- Contract Warranties
Contract warranties are also legally binding commitments, but the specific warranties are outlined in the contract. For example, if you agree to execute a contract for a specified number of milk cartons to your business each day, and the contract warranty states the assurance that the business will receive ten cartons of milk each day, if the milk delivery person does not deliver those ten cartons every day, the business could have a contractual dispute claim for unfulfilled contract warranties.
- Severability
Severability is the legal concept that if one of the contract’s clauses was to become illegal or unenforceable, the remainder of the agreement still stands or is still valid and applies to both or all of the involved parties. An example of this would be a non-compete contract; if the contract states you can not solicit clients within a 50 miles radius, and the government later creates new legislation declaring that any distance over a 25-mile radius is illegal, the rest of the contract remains within the 25-mile radius parameter.
- Choice of Law and Governing Law
Sometimes, in contracts, the people agreeing to the agreement are physically located in different jurisdictions. The people forming the contract may have ideas about which law they wish to have governed the contract in a “choice of law” agreement clause. For example, when an Apple User agrees to the Terms and Conditions of purchasing a new Apple product, they agree that the “Choice of Law” or “Governing law” is in the state of California, as this is where Apple is headquartered. This means that if an Apple user needed to dispute this contract, they must abide by the State of California’s contract and agreement rules, and if the user were to bring this matter to a Small Claims Court, it must be brought in the State of California.
- Binding Arbitration or Mediation
Some contracts have binding arbitration rules. This means that even if there were to be a contractual dispute, you would not be able to sue the other party to the contract in court. You would have to go through the arbitration process. Arbitration is another way of solving issues that does not take place in a courthouse, with a judge, or with attorneys. Instead, arbitrators or a third party will assist the parties to the contract in their dispute. Binding arbitration is when the arbitrator’s decision has full authority and is “binding” over all the parties associated with the contract. You can not usually appeal a binding arbitrator’s decision or their decision making process.
- Specified Term and Duration
Some contracts run for the indefinite future, such as a monthly rental for a musical instrument contract running until the return of the instrument. Other contracts run only for their specified term. A specified term could be just for the summer season for a kayaking user agreement, or for the winter for a snowboard user agreement. It is always better to directly put into the contract the specified term or duration that you intend to have this contract or agreement govern; that way, there are no potential legal disputes down the road.
- Scope or Specific Duties
In some contracts, like a Freelancer’s agreement with a client, it is critical to ensure that the scope or specific duties are outlined. For example, a freelancer would want to include that their scope includes only working on the specified project and not typical employee responsibilities like attending weekly work meetings or needing to use paid time off or similar typical employee-employer relationship terms. It is essential to define the scope of the contract to ensure that both parties are on the same page and make it as straightforward as possible so that both parties can view the agreement and come to the same conclusions on the specific scope or duties each party has.
Can I modify a Contract to include the essential terms?
Contract modifications, or amendments to a contract, must be agreed upon by both or all involved parties. There must be additional consent to the agreement. This means that both or all parties must sign to indicate their agreeance with the specified contractual amendment for additional consideration. Remember, a contract must offer consideration or something in exchange for signing or agreeing to the contracted terms and conditions.
If you have any concerns over a contract’s legality or have a potential agreement or contract dispute in New York State, the knowledgeable and experienced attorneys at The Rozhik Law Firm are available to help you. Call them today at (917) 567-1963 for a free consultation.