Legally Binding Contract Between Two Parties
A legally binding contract between two parties helps to avoid disputes between individuals or businesses.3 min read
A legally binding contract between two parties helps to avoid disputes between individuals or businesses. The first step in drawing up a contract is for the parties to discuss and negotiate the terms that they require. The final document will then stipulate the requirements and obligations from each party's side.
While a contract does not need to use any specific language in order to be legally binding, the courts will usually interpret the terms in the simplest possible way. It is important that both parties take the time to think about what they need from the contract and draw up the terms and conditions accordingly.
How to Draw Up a Legally Binding Contract
Here are the steps that should be undertaken when drawing up a contract:
- Look over the notes that you took during discussions with the other party. Get clarification on any points that you are not sure about.
- Start compiling the agreement. Make sure that each party is named in the first paragraph.
- Include any definitions that are necessary. For example, if you are going to use the words “Work Product” several times, then the specific meaning of these words should be stated at the beginning of the contract.
- Make sure that important details, such as payment terms, timelines for performance, and the contract's duration are included.
- Define what the agreement is about and lay out each party's requirements and obligations clearly. This includes the services that the parties are expected to provide and any specific amounts of money that are required to be paid by a specific date.
- Any protective language that is needed must be included. This includes clauses related to limited liability, which is often mutual. The contract should protect any confidential information relating to both parties.
- The contract should also specify that the parties are not in competition and that neither may solicit the other's employees.
- Relevant “boilerplate” information must be included, as well as lines for both parties' signatures.
- A series of generic provisions are usually included, such as both parties' addresses and an entire agreement clause, which specifies that the contract covers everything that has been discussed.
- The contract must stipulate whether rights and responsibilities are allowed to be assigned.
- Finally, the contract must be signed and countersigned. When each party signs the agreement, they indicate their acceptance of all the terms that it contains.
Legally Binding Contracts In North Carolina?
In the state of North Carolina, a legally binding contract empowers a party who has been wronged to claim damages in court based on the basis of a breach of that contract. This contract can be in written form or can have been made verbally. It must constitute an agreement, promise, memorandum of understanding, lease, and settlement between the parties.
In this particular state, a contract must contain three specific elements in order to be legally binding. Firstly, one of the parties must make the offer of a product, action, or service to the other party. The second party must agree to compensate the first party with something of value. Thirdly, an agreement that can be defined as reasonably fair must be reached between the two. This is implemented by North Carolina courts to ensure that there is never a case in which one party agrees to an abusive contract.
Cases In Which Verbal Contracts Are Not Valid
In most cases, verbal contracts are treated the same way as written contracts in North Carolina. However, it is important to note that in certain cases, a verbal contract will not stand up in court. These include the following:
- Contracts relating to the lease and sale of land.
- Business loans with a value greater than $50,000.
- Commitments to paying off debt that has already been discharged due to bankruptcy.
- Selling items worth $500 or more.
- Offers to pay off a third party's debt
The fact that a verbal contract is valid under North Carolina law does not necessarily mean that the courts will enforce it. The aggrieved party will need to have proof that a verbal contract was in place. This proof could take the form of witnesses, phone records, emails, or letters. If a contract was signed or verbally agreed to due to one party being put under pressure, it will not be binding in the state of North Carolina.
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