What Makes a Legally Binding Contract?


A contract is an agreement between legal entities or people in which one party agrees to provide goods or perform services in exchange for money or other goods and services. To form a contract, there must be an offer and acceptance between the involved parties in exchange for consideration. An agreement is not necessarily legally binding. Moreover, to enter into a legally binding contract, a person must have the legal ability or capacity to enter into a contract. For instance, minors – with a few exceptions – do not have the legal capacity to enter into a contract.

What makes a contract legally binding?

For a contract to be legally binding and enforceable, consideration must be exchanged. A legally enforceable contract can either be written or oral. However, depending on the nature of the transaction, some contracts might need to be written down to be enforceable. The preferable contract is the written one because it eliminates disagreements about the terms and conditions. Even a written contract must outline the agreement between the parties involved with enough specificity to be binding. Written contracts contain terms such as “special damages”, “default”, and “liquidated damages”, with meanings that are not known to non-lawyers.

If a party to a contract breaches it, the above terms can affect the damages and remedies available. To understand the terms, you will need a professional contract attorney in Santa Rosa like Johnston & Associates, Attorneys at Law. Therefore, if you receive a contract, you should consult an attorney before signing it. Contrary to what many people believe, you do not have the right to back out of a legally binding contract. The right to cancel a contract is known as the “right of rescission”. Only a few contracts are required to have a right of rescission. If a contract contains this right, you must write a notice of cancellation within the time stipulated to cancel it.

A contract attorney in Santa Rosa like Johnston & Associates will help you to navigate the murky waters of contracts. Visit Johnston & Associates, Attorneys at Law, or call (707) 200-1366 to get in touch with a competent lawyer who will help you with any contract issue.