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Contract Drafting and Review

Before entering into a contract, there should be a careful review of the terms of the contract. If a contract is being drafted, the same issues will have to be addressed before the contract is finalized. To be enforceable a contract must meet at least the following requirements:

  • Each party has to promise or provide something of value to the other. Without this exchange, there is no contract.
  • There must be a clear or definite offer to contract ("Do you want to buy this?") and an unqualified acceptance ("Yes!").
  • The purpose of the agreement must not violate the law e.g. a contract cannot require one party to do an illegal act such as violating laws regarding the disposal of hazardous materials.
  • The contracting parties must be competent and capable of entering into a contract, e.g., contracts with minors and incompetents are not enforceable, a contract with a corporation executed by a party not authorized to enter into the contract may not be enforceable.
  • The contracting parties must intend to be bound by their agreement and must agree on the essential terms.

In addition to these general rules, federal and state laws may impose more requirements on particular types of contracts. For example, certain consumer contracts must meet additional requirements, and some contracts must be in writing.

The term "contract" often refers to a written agreement, typically including some or all of the following elements introductory material (sometimes known as "recitals" or "whereas provisions"); definitions of key terms; a statement of the purpose or purposes of the agreement; the respective obligations of each party (and conditions that may trigger obligations); assurances to the contracting parties including warranties, representations, or covenants); exhibits or attachments.

It is extremely important that prior to the execution of a contract that the contract is carefully reviewed to make sure that it contains all of the provisions to make the contract clear and operational, that is legal and does not violate any statutes or regulations, and that it can be terminated upon proper notice.

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