Business Law 101: The Basic Elements Necessary for a Valid and Enforceable Business Contract

Every day, people all over New York enter into business contracts. They buy or sell property, sign partnership or vendor agreements, and become employers or employees. Unfortunately, many of these parties simply sign on the dotted line without confirming that the contract has all the provisions required to make it enforceable.

Don’t let yourself be one of them.

In New York, there are four basic requirements in a valid and enforceable business contract. In addition, both parties must be competent adults with a legal ability to enter into a contract and the subject matter cannot be illegal or a violation of public policy.

 

  • An offer. Offers consist of three main elements. The first is one party’s statement of intent to enter into a contract. The second is a specific proposal with certain terms, and the third is a direct identification of the person receiving the offer. Unless all three are present, an offer has not legally been made.
  • An acceptance. Acceptance is a final and unconditional consent to the offer’s terms. It may only be made by the person receiving the offer or their authorized agent, and in the manner requested by the party who made the offer.
  • Consideration. With contracts, consideration may be money or promise of a future benefit. It must be clearly implied by the contract’s terms or, at least, agreed upon by both sides.
  • Mutual Obligation: For a contract to be enforceable, both parties must have a meeting of the minds on all of its terms. If one party was fraudulently misled about the terms, the contract is voidable.

 

The absence of any of these elements can render the business agreement null and void.

Oral vs. Written

A contract does not always have to be written, but verbal contracts are typically difficult to enforce unless the terms can be proven or both parties admit to them. This doesn’t mean that someone can walk away from an agreement simply because it is not in writing: there are ways to prove that a contract existed, especially if one party fulfilled their side of the agreement.  The terms of a signed, written contract are simply easier to prove.

The New York Statute of Frauds requires certain types of contracts to be in written form, namely:

  • Contracts for the sale or transfer of real estate
  • Contracts that cannot be completed within one year of execution
  • A guaranty of the payment obligation of another party
  • Loan or real estate brokerage services (unless the party providing the service is a licensed real estate broker or attorney)

At the Levoritz Law Firm, attorneys Yonatan Levoritz and Steve Krishtul can help you ensure that your contracts accurately reflect your intentions while remaining legally valid and enforceable. These agreements protect your resources and enable your business to grow, so experienced legal advice is a solid investment in the company’s future.