Key Takeaways

  • A legal agreement becomes enforceable when signed by competent parties with mutual assent and consideration.
  • Business management involves overseeing operations, resources, personnel, and strategies to achieve organizational goals.
  • There are multiple branches of business management, including financial, marketing, operations, and strategic management.
  • Effective contract management and compliance with legal agreements are essential responsibilities within business management.
  • Understanding how legal agreements fit into business management practices enhances organizational efficiency and risk mitigation.
  • You can consult an attorney on UpCounsel to help draft or interpret legal agreements that align with your business needs.

What is legal agreement is a common question among those who are unfamiliar with contract law, and the legal protections of a written agreement.

Specifically, a legal agreement is a written document that will identify the parties’ roles and responsibilities under the agreement. Once the written document is signed, either manually, digitally, or electronically, the document becomes legally binding. This means that if either party fails to perform his or her duties under the agreement, he is in breach of contract.

Examples of Legal Agreements

In addition to the above, there are many other examples of legal agreements that we are all familiar with, including the following:

  1. Contracts for the purchase of large items, such as appliances that are being delivered from large appliance stores.
  2. Wills
  3. Healthcare contracts
  4. Driver’s licenses
  5. License to practice law or medicine

When we purchase large ticket items, such as a set of appliances, we generally enter into a contract with the store to deliver and install such appliances. These agreements are legally binding on both parties. Furthermore, if you have ever written a will, this is actually a legally binding agreement. Similarly, healthcare and other insurance-related documents are legal agreements between the insurance provider and you identifying your rights under the agreement, along with yours and the company’s responsibilities in terms of coverage and fees.

Driver’s licenses are also legal agreements entered into between you and the state where the DMV is providing the license. Essentially it states that you can legally operate a motor vehicle.

Professional licenses also include legal agreements that will indicate if a professional is licensed in a particular area, which might be medicine, law, engineering, etc.

Legal agreements might also include limitations on what you can do with regard to a particular area. For example, a court can issue an order indicating that you must leave the premises where you live due to non-payment. This basically states that you are being evicted from the premises due to non-payment over a period of several months or years. This legal agreement provides that you must leave the property by a specific date or you can be physically removed from the premises.

Even arrest warrants and restraining orders are considered legal agreements in that they prevent, prohibit, or limit a person in what he or she can do.

The Role of Legal Agreements in Business Management

Legal agreements are foundational to business management. They formalize relationships, protect interests, and ensure accountability between parties. In business, contracts govern interactions with employees, vendors, clients, investors, and regulatory bodies. They can take many forms, including:

  • Employment contracts: Define roles, compensation, and termination terms.
  • Vendor and supplier agreements: Outline delivery schedules, payment terms, and quality standards.
  • Lease agreements: Clarify rights and obligations between businesses and property owners.
  • Non-disclosure agreements (NDAs): Safeguard confidential information shared during business dealings.
  • Licensing agreements: Permit use of intellectual property or technology under specific conditions.

These legal tools ensure that both parties understand their duties, fostering trust and operational efficiency—a core principle in what is business management.

Contract Formation

A contract is formed between two parties who agree to provide some sort of service or delivery of goods in exchange for money. The contract, or legal agreement, is formed when the following elements are met:

  1. Offer
  2. Acceptance
  3. Consideration
  4. Mutual assent
  5. Legal capacity

With regard to contract formation between such parties, one party generally initiates the formation of the contract by making an offer to the other party. After that, the receiving party must accept the offer as is. Once this happens, the parties will need to exchange something of consideration. This can be something of monetary value or a promise to perform under the contract.

Thereafter, the parties will have to prove mutual assent. If one of the parties was forced or coerced into the contract, then mutual assent doesn’t exist, and the contract is not legally binding or enforceable. Lastly, the parties must prove that they are both legally capacitated. If the parties are under the age of 18, mentally incompetent, or under the influence of drugs or alcohol at the time the contract was signed, the parties are not deemed legally capacitated.

Keep in mind that not all contracts involve a formal offer and acceptance in the way you might think. As noted above, many legal agreements are one-sided, forcing the party to abide by the terms identified in the legal agreement. This is especially true for those legal agreements preventing, prohibiting, or forcing one of the parties to do something.

Why Business Management Needs Legal Clarity

In the context of what is business management, legal clarity ensures that organizations can operate confidently and efficiently. Legal missteps—such as unclear contracts or failure to comply with regulations—can lead to litigation, reputational damage, or financial loss.

Business managers should ensure that contracts:

  • Clearly define roles, expectations, and outcomes
  • Contain enforceable terms and dispute resolution clauses
  • Are reviewed by legal counsel when appropriate

Proactively managing legal agreements minimizes misunderstandings and strengthens relationships with stakeholders.

Branches of Business Management

Business management encompasses several specialized branches, each addressing different operational needs. Understanding these areas helps ensure that legal agreements are tailored appropriately for each function.

  1. Financial Management: Involves budgeting, accounting, investments, and ensuring contracts align with financial planning and regulatory standards.
  2. Marketing Management: Develops strategies for brand positioning and promotion, often requiring contracts with agencies, influencers, or advertisers.
  3. Operations Management: Oversees day-to-day production or service delivery, including vendor contracts and supply chain agreements.
  4. Strategic Management: Focuses on long-term goals and growth plans. Strategic alliances and joint ventures often require detailed legal agreements.
  5. Human Resource Management: Manages recruitment, compensation, and compliance with labor laws. Employment contracts and benefits agreements fall under this area.
  6. IT and Technology Management: Ensures technological infrastructure supports business goals, involving software licensing and service level agreements (SLAs).
  7. Customer Relationship Management: Maintains client engagement and retention, sometimes using service contracts or terms of use documents.
  8. Risk and Compliance Management: Ensures adherence to laws and policies, and often works closely with legal teams on regulatory filings, audits, and internal policies.

Each of these branches relies on legal agreements to operate within legal frameworks and minimize liability.

What Is Business Management?

Business management refers to the coordination and administration of business activities to achieve defined objectives. It involves planning, organizing, leading, and controlling resources—including people, finances, and processes—to ensure smooth operations and profitability.

Professionals in business management focus on maximizing efficiency, aligning team performance with company goals, and ensuring legal compliance. This means that understanding contracts and legal agreements is not only relevant but critical. Whether managing a startup or a large enterprise, knowing how legal documents affect hiring, partnerships, and procurement is key to long-term success.

Key functions of business management include:

  • Strategic planning and decision-making
  • Financial oversight and budgeting
  • Human resource management
  • Operations and logistics coordination
  • Marketing and customer relationship management
  • Risk mitigation and legal compliance

Mastering these areas enables businesses to maintain competitiveness and adhere to regulations.

Frequently Asked Questions

  1. What is the role of contracts in business management?
    Contracts define the expectations and responsibilities of business relationships, ensuring legal enforceability and reducing risk.
  2. Why is legal capacity important in a contract?
    Legal capacity ensures that all parties are competent to understand and enter into a binding agreement, which is essential for enforceability.
  3. How does business management relate to legal compliance?
    Business management includes ensuring that operations adhere to laws and regulations through proper documentation, contracts, and internal policies.
  4. What are the most important branches of business management?
    Key branches include financial, marketing, operations, HR, and strategic management, each requiring tailored legal agreements.
  5. Can UpCounsel help with business contract creation?
    Yes, you can find experienced attorneys on UpCounsel to draft or review contracts aligned with your specific business needs.

If you need help learning more about a legal agreement, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.