Business

When Does an Agreement Become a Contract?

An agreement is a decision made between two or more parties. In order for an agreement to become a contract, it needs to become a legally enforceable contract. A contract comes into existence when an offer has been made and accepted. Although contracts do not necessarily need to be in writing, a signed written contract will obviously provide greater evidence of its existence than a handshake.

The Importance of Contracts
Written contracts provide vital evidence should legal disputes about an agreement arise in the future. Although some oral agreements can be considered legally binding, they can be very difficult to prove in court, often due to a lack of evidence. A signed, written contract will help ensure that all parties fully understand the terms of an agreement, as well as providing additional evidence.

Writing a Contract
The wording of a contract is especially important. It should be written clearly enough for all parties to understand. It needs to contain all the terms of the agreement and be written in a way that doesn’t create ambiguity. If a contract isn’t worded correctly, it can lead to disputes and expensive legal battles in the future.

Without in-depth knowledge of legal processes, writing a contract can be very difficult. Contract templates can be extremely useful in drafting legal agreements and remove many of the difficulties of writing contracts. A template can help ensure that all the essential items are included in the contract, and that it is up to date with all the necessary legislation, making the contract as strong as possible from a legal point of view.

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