Good contracts are crucial in business. Poorly made ones make it more likely you end up in a costly contract dispute.
If you get to court, the judge will look at the contract’s validity. Here are some things they will check before deciding whether there is anything to enforce or not:
Did both parties freely agree to it, and were they competent to do so?
While verbal agreements can sometimes stand up in court, it’s better to have a physical document with each of your signatures on it. Yet even that can be invalidated if a judge believes one party forced the other to sign. Or if one party was not mentally competent enough to understand what they were signing.
Is the contract still relevant?
A well-written contract needs limits. For example, a commercial lease contract needs a time limit, after which either party can end the agreement without penalty.
Sometimes agreements need geographical boundaries too. One instance would be a franchise agreement where the franchisor promises not to let anyone else sell their product in the same town.
Can you fulfill the contract without breaking the law?
A legal contract cannot cover illegal activities.
Is the contract fair to both parties?
This can crop up when one party has far more experience or knowledge than the other. They can try to tie an innocent newcomer into an unfavorable deal with unreasonable penalties if they fail to meet the terms agreed upon.
Contracts need to be fair and reasonable to both parties. Legal advice is available if you feel yours is not or believe the other party is in breach of the agreement.
