It’s a New Year, but it’s time to return to an old favorite. DRAW THE LAW! Seeing, as it is so popular with business people, entrepreneurs, social media mavens, DJs, other lawyers, and corgis (ok, I made the last one up). I am moving the postings for Draw the Law up to either Tuesdays or Wednesdays (given my schedule) so you can enjoy it for more of the week! I will always being going back to basics of law and legal issues for entrepreneurs and small business owners. They will also be more bite-sized (or is that byte-sized for a blog?).
Starting Out With Contracts
So it’s a New Year, and it is the Year of the Water Dragon in the Chinese zodiac, which means for most signs prosperous. Let’s forget the debt collecting from last post and the woes of last year, let's make some deals!
Today, I am kicking off with contract law, which I hope to culminate in a month or two into a live contract workshop for businesspeople to understand what the word “contract” means for attorneys. Why? I believe the more you know, the more it helps lessen your legal costs and doesn’t waste your attorney’s time of re-explaining the wheel to you. (*In addition, for the time we are on contracts, Boilerplate Blurb will be fused with Draw the Law).
What is a Contract?
IT IS NOT THAT PIECE OF PAPER YOU SIGNED! Let me repeat that a “contract” is NOT a set of papers with words on it that you signed. The papers with words on them are merely an embodiment of the agreement.
A contract IS a voluntary promise or a set of promises that a court will enforce. A contract can be oral or written. The details of the contract are the provisions or terms.
Do I Need a Lawyer to draft my Contract?
No, not at all. We make contracts all the time. Have you every told a friend you would sell them an old textbook or computer for X dollars? Notice what you are doing. Your promise is that you will exchange your property for the promise of them giving you the proper amount of money? Did you need an attorney for that?
What you did need for this to be a contract is the promises, but the support of an exchange of something valuable between the parties (you and your friend). This is called consideration. Typically, in our modern capitalistic society, consideration is money in exchange for goods or services.
Do I Always Need Consideration?
Yes. There is no contract without consideration. To tell if something is good consideration we look for a bargained-for benefit or detriment. However, the benefit or detriment MUST be legal. Remember that a contract needs to be enforceable by a court. Thus if you wanted to trade your gold watch for meth, and the drug dealer stole your watch, you could not go to a court to enforce the agreement to get the meth. Why? Meth is an illegal substance, therefore not good consideration. While you always need consideration the subject of the promise(s) can never be something illegal.
A Word on Complex Contracts and Attorneys
While, I did say you did not need a lawyer to draft your contracts first consider the complexity of the transaction you are doing. Consider what you want spelled out, what you are bargaining for, and what does it mean for your company? Finally, realize that many transactions are regulated or have a certain applicable commercial laws, thus legal review can be crucial.
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*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.