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The law of contracts in each
state can be very different. Contract law is purely a creature
of state law and therefore there is little that each state can
agree on. Because of the variety of laws from state to state,
it is impossible to offer any real assistance in this area. It
is absolutely imperative that you consult an attorney in your
home state for assistance with any issues regarding contract
law.
There is, however, one issue
with which most lawyers in most states can agree on, and that
should be followed when entering into a contract with a
corporation or individual, always put everything in writing.
A written document is
essential for many reasons. The primary reason is in the event
of a dispute between the parties, the agreement will be in
writing, signed by all parties and therefore the actual terms of
the agreement will be known by all. Of course, the
interpretation of those terms may be in dispute, but at least
there will be a document to refer back to. Additionally, there
can be some key provisions of any contract which may limit the
issues that can arise in a dispute.
These provisions include, but
are not limited to:
a.
Attorneys Fees:
Include a provision that
provides for attorneys' fees to the prevailing party in the
event that a dispute arises in connection with the performance
of the contract. This provision may reduce the number of actual
issues litigated in a court of law as the parties to the
contract are on notice that the loser pays not only their own
attorney, but the opposing attorney as well. This provision can
foster dispute resolution and avoid expensive legal
proceedings.
b.
Choice of Law:
Especially in a case where a
contract involves parties from different states, it is always
prudent to include in the contract a provision that sets forth
the state where any dispute connected to the contract will be
decided.
c.
Material Terms:
If the parties are going to
the trouble to reduce their agreement to a writing, then any
term of the contract that is important to either party should be
written in the contract. Nothing should be left out. Included
in any contract should be:
the length of the
relationship between the parties;
the amount one party
is expected to pay to the other;
the amount of time
within which payment is to be made;
the method of payment;
penalties for late
payment; and
the exact amount or quality of
the goods and services to be provided.
d.
Severability:
There should be a provision in
the contract that provides that if any provision of the contract
is found void and unenforceable by a court, the remainder of the
contract may still stand.
e.
All inclusive:
There should be a provision
that states that the terms of the agreement are all the terms of
the contract, and that any other terms referred to prior to the
writing of the agreement are not enforceable. In other words,
all the terms of the agreement are found in the contract.
f.
Changes must be done in writing:
The contract should include
language that if any changes need to be made, such changes must
be done in writing and signed by both parties, or the changes
are not enforceable. This again provides a written record of
the agreement and leaves less room for any misunderstandings.
Most states have adopted
specific laws regarding commercial transactions. This body of
law MUST be consulted prior to entering into a contractual
relationship if the contract deals with the purchase/sale of
goods.
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