Legally binding agreements are those that are enforceable by law and are often used in business dealings. To ensure that an agreement is legally binding, there are some important dos and don’ts to follow. We will cover them in this article so keep reading!
What Defines a Legally Binding Agreement?
A legally binding agreement is one that has been made with the full intention of being enforced under the law. It must be in writing and signed by both parties involved. The language used in a legally binding agreement should be clear and concise with no room for misinterpretation or ambiguity. Furthermore, the agreement must be supported by the consideration which is an exchange of value either through money or goods/services.
If an agreement does not meet the criteria of a legally binding agreement, it cannot be enforced in court. For the parties, it might mean that the agreement is not valid, or that the terms and conditions of the contract can be interpreted differently by each party. One of the ways for the parties to interpret the conditions in contracts in agreements in the same manner is by using pre-made legal forms that are crafted by lawyers and include only proper legalese. There are plenty of websites on the net that offer diverse legal papers, like FormsPal.com.
Here is the breakdown of what should and should not be done when it comes to legally binding agreements.
Dos for Drafting a Legally Binding Agreement
Deal with the right people
Make sure all parties involved have the capacity to enter into a contract. This means they must be of legal age and of sound mind. If a person is an adult but you doubt they have the authority to enter the contract on behalf of a certain business, you should confirm it with legal advice.
Set out clear terms and expectations
Be sure to clearly state the purpose of the agreement, what is expected of each party involved and when those obligations need to be fulfilled. It’s also best practice to include a clause that outlines potential consequences for breaching any part of the agreement.
Put it in writing
To ensure your agreement is legally binding, it must be written down and signed by all parties involved. Make sure to include details such as the date, names of parties involved, and any relevant timelines or deadlines.
Identify parties correctly
Ensure that each party is correctly identified in the agreement, and make sure to include their full legal name, address, and phone number. If a business is involved, ensure it is also correctly identified with its trading name and ABN or registered number.
Include all the necessary details
Ensure that the agreement includes all necessary information such as payment terms, delivery details and any other relevant conditions. If you’re unsure of what to include, it’s best to seek legal advice before signing the document.
Outline payment obligations
Be sure to outline what is expected for payment, including due dates and the methods of payment. If there are any discounts or additional fees included in the agreement, make sure these are also detailed clearly.
Remember about the termination clause
It is important to include a termination clause that outlines the procedures for ending the agreement. This will help avoid disputes and potential legal action if either party decides to end their involvement in the contract.
Keep records
Keep copies of all documents related to the agreement and make sure both parties maintain accurate records of payments, obligations, and communication. This will help provide evidence in the event of a dispute.
Include a dispute resolution clause
Include a clause that explains how potential conflicts or disputes will be managed and resolved. This should provide guidance for any party involved in a dispute about how the matter can be solved.
Add the provision about bringing the changes to the agreement
It’s important to include a clause that allows for changes or amendments to be made if necessary. This should clearly outline the process for making any alterations, and how both parties can agree on them.
Let a lawyer look through the agreement
It’s a good idea to have a lawyer review the agreement before you sign it. This will ensure all legal requirements are met, and provide peace of mind that your interests are protected.
Donts for Drafting a Legally Binding Agreement
Don’t miss out on details
You shouldn’t leave out any important details or conditions related to the agreement. All parties involved should be aware of the agreement’s content.
Don’t overpromise
Try not to make promises that cannot be kept. This can result in serious legal consequences.
Don’t hesitate to ask
Never sign an agreement without fully understanding it. Be sure to read every detail of the contract before signing it.
Don’t break your limits
Don’t agree to terms or conditions that are not acceptable to all parties involved. All parties should be in agreement on all terms before any signatures are made.
Don’t neglect protection
Don’t leave out details that may protect one party while leaving the other vulnerable. All parties involved should feel protected and secure.
By following these dos and don’ts, you can ensure that your legally binding agreement is valid and enforceable by law. Make sure to consult with a legal professional if you have any questions or concerns.