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 1 Bruner & O`Connor Construction Law § 2:8, Express Contracts – Definitive Agreement or “Agreement to Agreement” – Letters of Intent (August 2017 update). But first, this guide will define in more detail what a contract is – and what it is not. If one or more parties fail to fulfil their contractual obligations – i.e. in the event of a breach of contract – the contract itself serves as a guide for the courts to decide on a fair solution for the injured party or parties. Even if the parties to an agreement have established confidence, an agreement ensures that the obligations set out in the agreement are fulfilled as intended. Contracts are preferable to less formal agreements in almost all business situations, as contracts offer legal protection. Contracts allow the parties involved: Breach of contract occurs when a party fails to fulfill its obligations under the contract. In the example of buying a car, if you pay the dealer what you agreed, but the dealer refuses to hand over the car, the dealer is violating the contract. Experienced business people understand the value of a written contact. Nedalee Thomas, CEO of Chanson Water USA, said, “As someone who has created seven companies and has one that had $2.2 million in revenue in the second year, I always prefer a written agreement to an informal one. People forget what they agree with, and intentions and relationships change. As a boot strap that went into business with minimal funding, I always write my own contracts with basic words that can be found on the Internet, and then have them reviewed by a lawyer who specializes in legal protection.
“Contracts must be specific and detailed to ensure that the interests of both parties are protected in the event of disagreement. However, the prospect of drafting a treaty can seem daunting. The more details you put into a contract, the more complex your contract becomes. The quid pro quo must be legally sufficient and negotiated, although you certainly don`t have to enter into a bargaining war for the consideration to be valid. If you buy a car at the price of the sticker, this is a reasonable consideration. The parties just need to agree on the purchase price, benefit each other and get a mutual disadvantage: the dealer is less of a car, and you are less what you paid for the car. If two parties agree to exchange valuable goods or services, this is a bilateral contract.