Contract Law to Protect Your Business

Dealing with contracts is an integral part of business operations, so understanding the basics of contract law is imperative for small business owners. Contracts protect you when you are dealing with employees, suppliers, vendors, and other official entities with whom you interact. Here are some fundamental terms you should know when you handle contracts.

Capable Parties

Capable parties are the people or organizations directly participating in the contract. When you are referred to as capable, it means you an adult of sound mind who comprehends the contract details and understands what you are doing when you enter into it. Usually the mentally incapable, minors, and those under the influence of drugs or alcohol are not able to enter into binding contracts.

Offer and Acceptance

The process begins with a clear offer to form a contract. The offer can be withdrawn at any time before acceptance. However, according to contract law, once you unconditionally accept the offer, the contract is binding.

Consideration

Consideration refers to the value that each party in the contract offers to the other. Without consideration, no contract is possible, because consideration defines the purpose for the contract’s existence. Consideration can be amounts of money, material objects, services, or promises to act or refrain from acting.

Collective Agreement

Collective agreements are written or oral contracts negotiated between employers and employees or their trade unions. These are usually reached through collective bargaining and involve hours, wages, benefits, working conditions, and other facets of employment.

Bid Analysis

This is also known as bid appraisal, bid evaluation, and bid assessment. It refers to the examination of the bids of suppliers to determine which one offers the highest value for the expenditure. Using specific scoring techniques, you rank the bids in terms of the value they offer your company.

For more advice on protecting your small business, get in touch with Oakwood Commercial Capital Group.

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