Key Components of Business Contracts

Posted on: April 29, 2015

An Arlington business attorney can help break down complex business contracts. He or she may inform clients of the following key components that comprise such contracts.

Parties

The parties of the contract must be identified. The parties may be an S Corp, C corp, LLC, LLP, sole proprietorship or private individuals. It is important that the name of the business be listed correctly. The legal name of the business must be used, not a nickname.

Recitals

An Arlington business attorney can explain that the recital section of a contract spells out the purpose and meaning behind the contract. If the contract is ever challenged, this section can help aid with its interpretation.

Consideration

Every contract must be supported by consideration from each party. In the business context, the promises exchanged usually include the promise to pay for goods or services that are provided.

Material Terms

While every contract is different, some key terms are part of many contracts. For example, the price, quantity and time of performance are usually material terms. Agents and confidentiality may also be spelled out in the contract.

Schedules

Additional terms or guidelines for performance may be included on an additional schedule or exhibit to the contract.

Remedies

Many contracts specifically provide for the consequences of what will happen if one of the parties breaches the contract. The remedy may be a specific amount of money that is intended to adequately compensate the non-breaching party. Additionally, equitable relief may also be outlined in the contract. For example, the agreement may outline that an injunction may be sought and the breaching party can be made to pay the legal expenses incurred in this pursuit.

Termination

There may be a clause that specifies how the agreement may terminate by one or both of the parties. Termination may result when the parties mutually consent to its termination, upon the non-occurrence or occurrence of a condition that is neither party’s fault, by misrepresentation or by breach of a warranty or covenant. The contract may still outline any remaining rights after the termination of the contract.

Legal Assistance

If you would like more information on the key components of business contracts, contact an Arlington business lawyer at Schleifman Law, PLC by calling (703) 528-1021.