What is considered a legal contract?
A legal contract is any agreement between two people or businesses where they promise to exchange something of value – this could be anything from money passed, to food passed, to doing some work for someone. You might not think you offering to cook someone dinner in exchange for them putting up some shelves as a contract, but in the eyes of the law it could be.
Are all contracts legally binding?
No, but the exclusions are different to what you might expect. For contracts to be legally binding, they must comprise of the four elements of a contract: offer, acceptance, consideration and an intention to create legal relations. Offer and acceptance are fairly self-explanatory, one person offers something and somebody can accept that offer, but it must be accepted without special conditions otherwise this will be considered a counter offer. Consideration is where the something of value must be passed, it could be anything and the two things don’t have to be of equal value, a diamond ring could be bought with a croissant if the shop actually wanted to accept the offer. The parties must also intend to enter into a legally binding arrangement in which the contract will be enforceable, this can be something which is inferred from the situation, it is not expected that you would sue if you lent your sister five pounds and she wouldn’t pay you back, but it would be expected that you could sue a business if they refused to give you goods that you had paid for.
How do I create a legal contract?
A legal contract is made using the four elements of a contract, offer, acceptance, consideration and an intention to create legal relations. However these can be made in several different ways, there is a big misconception that contracts must be written, signed and full of legal jargon several pages long. This is not the case – many agreements are made verbally, via emails and text messages, ticking to accept t&cs, or the more formal traditional signed document. These are all ways of creating a legal contract and will hold up in court, provided that you have some proof, hence why we always suggest getting something in writing even if it is an informal email trail.
What types of legal contracts are there?
Should you use a professional contract writer?
We’re biased, but definitely yes! Many people will say they are able to write you an agreement and will either send you a template or give you a document that is not fit for purpose. It is important to talk to someone who is up to date on all legal updates especially things like consumer law, but also someone who writes similar contracts all the time as they will know best how to protect you against problems from a legal perspective as well as a practical one.
Should you ask a solicitor to write a custom contract?
Solicitors are a great place to go to for custom legal contracts, though they will often charge an awful lot for a simple contract. You should always talk to a legal professional with a specialism in contracts as they will know best how to protect you, a family lawyer is not going to be the most useful at drawing up business terms and conditions. At BEB we are all legally trained, plus all we do is contracts so we really know what we’re talking about!
Is it safe to use a free contract?
Obviously we can’t speak for all of them, but in our experience free templates are not fit for purpose. As they are free they are often not kept up to date with the law changes, and may have not been written in consideration of the current law when they were created. Free legal contracts are also not going to be bespoke to your business, they may have clauses in them which are entirely wrong for your business, which then void your contract.
Is it safe to use a contract template?
No, a bespoke contract is always best, the saying ‘something is better than nothing’ doesn’t apply to contracts. Having a free template that doesn’t reflect your business processes will often do more harm than good, you may end up getting paid late or not being able to sue your clients for non-payment because you haven’t followed particular processes in the contract even if they are irrelevant to you. Free templates will also not take into account anything specific that you must have in your contracts for legal or regulatory purposes, or may not protect you against your biggest headache in business. Of course you can use a free template and adapt it for your use, though you may end up deleting the most important clauses, or adding things that aren’t quite right or even totally illegal. Get a contract written bespoke to you that adapts to your processes rather than vice versa and it will save you so much time.
How much do contracts cost?
We write all our contracts under our fixed price packages, with the more contracts you need the less each document costs, all our pricing is available on this page. We also split the cost over three payments so it is more affordable for those with limited cashflow.
How much does it cost to have a lawyer write a contract?
Depends who you go to! We pride ourselves on being the best value for money out of most law firms, we will give you a bespoke document, explain anything you’re not sure about, and make any amendments until you’re completely happy with it, all for a fixed price. Our fixed price packages are available to view here, we will advise you of which will be best for you in our initial consultation, the more documents you need, the less each one costs, though we will find the most cost-effective solution for you.
Should you get your contracts reviewed by a legal professional?
Yes, we are happy to give you a review to point out any major issues that make your contract unenforceable, or not likely to protect you very efficiently. Your contracts should also be reviewed if there is a major new law or regulation that affects your business, or if you have changed your processes or business offering to ensure you are keeping your contracts relevant and legal.
What elements should a contract include?
Depends on the contract, each one should mention what is being passed between you, what each of you are responsible for doing, whether it is making payment on time or providing access to something or someone. They should also include how the contract can be cancelled, some standard waiver and severance clauses, and information on what you will do with their data in accordance with GDPR.
Can I write a contract without a lawyer?
You can have a go at writing a contract yourself, by all means. Lawyers have specialist knowledge on the law and protecting their clients against all the things that go wrong. You may use an incorrect template as a starting point for your contract, or add totally unenforceable or illegal clauses – I’m sure you heard about Seabourne Freight! Although contracts don’t need a lawyer writing them to be legal, but they will benefit from the knowledge and advice that a lawyer can bring.
Are all contracts enforceable?
Provided they have the 4 elements of a contract, and don’t have any terms that directly breach any laws, all contracts are enforceable. The main time that contracts get ruled as illegal is when they are unfair towards a consumer which is a breach of the Consumer Rights Act 2015. If your contract is borderline on this issue, make sure you add a severance clause to your contract so that your whole contract isn’t ruled as illegal, only the particular clause.
Is a handwritten contract legally binding?
Yes. As long as the handwritten contract contains the four key elements of offer, acceptance, consideration and intention to create legal relations then this will also be binding. It does not need to be lengthy and a full written document for it to be legally binding. ‘fag packet’ agreements can still be legally binding, they are simply less detailed and do not necessarily cover every eventuality, particularly all the ‘what-ifs’ and explaining what happens if it does.
What constitutes a breach of contract?
Any time someone goes against what is said in the contract, whether you want to claim damages for such a breach is a different matter. If it was a small breach that was with your best customer, you may wish to overlook it, however if it is a major breach that affects your business or affects your ability to continue, this is when you need to terminate the contract and think about legal action. We always add a waiver clause to our contracts which allow you to ignore minor breaches of contract should you wish, but means that you do not have to always do this, or if you have allowed once, you don’t have to do so all the time.
What is an example of breach of contract?
The most common breaches of contract that we come across all the time is late or non-payment of invoices, other breaches may be things like not providing all the agreed materials in enough time to complete a job, confidentiality breaches, or stealing customers or employees. It entirely depends on what your biggest concerns are within your arrangement as to what terms are added to your contract.
What are contract terms?
Essentially, these are the things that you must do according to the contract. The phrase terms and conditions is used so often that it seems to lose all meaning, but it is just as it says, a term or condition of the contract. ‘If you don’t do X we won’t do Y’ is the simplest way of explaining this, they’re particular things that must be done for the contract to take effect.
What is the difference between an agreement and a contract?
An agreement is simply an understanding between two or more parties. A contract however, is a specific type of agreement that, by its terms and elements, is legally binding and legally enforceable in a court of law. In general though, most people mean the same thing when talking about agreements and contracts, in the same way that terms and conditions can be a contract or agreement too.
How can a legal contract be terminated?
Quite simply, when it says! Most contracts will have a clause in them to say when each person can terminate, often there are conditions attached or a notice period required – many people get stuck in contracts because they have not consulted the termination clause properly before agreeing the contract. There are some legal ways that you may get out of a contract if you cannot use the usual termination clause, however this would be if the other party had breached the contract, if the contract had become impossible to perform, or if the contract has simply expired or completed.