It’s usually less expensive to pay for legal counsel to prevent legal complications than it is to pay for legal counsel to resolve legal complications. Buying or selling a business and business contracts can be very complex. Don’t risk entering into an agreement that will not stand up in a court of law -- let us handle the details for you.
- Negotiation, review and preparation of business contracts
- Representation in business contract disputes and collection matters
- Purchase and sale of businesses
We’ll be happy to answer all of your questions when you contact us, and here are a few of the most frequently asked questions about contracts:
- Who can make a contract?
- Is it possible to get out of a contract?
- Do contracts have to be in writing?
- What are the key elements of a binding contract?
Who can make a contract?
The laws of each state define who is competent to form a contract. Generally, competency requires a minimum age and mental ability to understand the contract.Age Requirement
-- A person must be the age of majority (18 years old in NH) to be considered competent. If someone younger than the age of majority tries to form a contract, a court may refuse to enforce it.Mental Ability to Understand
-- A person must also satisfy mental capacity requirements in order to be considered competent. New Hampshire defines mental capacity as a person's capacity to understand his or her actions and to appreciate the consequences of forming a contract.Minors and the mentally incompetent lack the legal capacity to enter into contracts.
All others are generally assumed to have full power to bind themselves by entering into contracts.Corporations have the power to enter into contracts.
If you doubt whether an individual with whom you are dealing has authority to enter into a contract with you, insist that the contract be reviewed and signed by the corporation's president. Generally, the individuals associated with a corporation are not themselves responsible for the corporation's debts or liabilities, including liability for breach of contract.
Is it possible to get out of a contract?
There are some instances in which the law will refuse to enforce a contract. A court may refuse to enforce a contract if it becomes truly impossible for one of the parties to perform.
For example, suppose a pilot contracts with an airport to keep his plane in their hangar, but the hangar is destroyed in an earthquake. A court would not enforce the contract because it has become impossible for the airport to provide the hangar. A court may also refuse to enforce a contract because it is extremely unfair to one of the parties.
Often courts require that the terms of the contract and the way in which the contract was formed both be grossly unfair before it can be set aside.
Do contracts have to be in writing?
Not all contracts must be in writing. However, as a general rule, it is wiser to have the terms written in understandable language -- plain English -- to save future misinterpretations and errors.
As a practical matter, if a contract is not in writing, it is more difficult to prove what contracts terms were actually part of the agreement.
New Hampshire has laws (called "Statutes of Frauds") listing the types of contracts that must be written in order to be enforceable. The purpose of the Statutes of Frauds is to prevent fraudulent claims from arising. Although the laws vary from state-to-state, New Hampshire requires that the contracts that generally must be in writing are:
- sales of real property;
- promises to pay someone's debt obligations;
- a contract that takes longer than one year to complete;
- real property leases that run for more than a year;
- contracts for an amount or other consideration that exceeds the state's threshold;
- a contract that will go beyond the lifetime of the one performing the contract;
- the transfer of property upon the death of the party performing the contract
If you agree verbally to a type of contract listed in your state's Statutes of Frauds without getting the agreement in writing, the contract is not enforceable, although there are some exceptions. Because state laws vary in this area, it is strongly suggested that you consult with an attorney, if only to review the proposed contract. Do not wait until after you have signed; that can be too late.
What are the key elements of a binding contract?Competent Parties
-- For a contract to be valid, each side must have the capacity to enter into it. Most people and companies have sufficient legal competency. A drugged or mentally-impaired person has impaired capacity and chances are a court may not hold that person to the contract. Minors (usually those under eighteen) cannot, generally, enter into a binding contract without parental consent, unless it is for the necessities of life, such as food, clothing, or for student loan contracts.Consideration
-- If the other side is to be held to the contract, you must give up something in exchange. This is called consideration. No side can have a free way out or the ability to obtain something of value without providing something in exchange. Money is the most common form of compensation, but it can also be property, giving up a right or valid claim, making a promise to do or not to do something, or anything of value. Agreeing to perform an illegal or illicit act is not consideration and the contract is void.Mutual Assent or Meeting of the Minds
-- Each side must clearly understand the essential details, rights, and obligations of the contract. Putting the deal down on paper prior to signing it will greatly help avoid future misunderstandings and disputes. Meeting of the minds sometimes can be expressed by words spoken or gestures made or can be inferred from the surrounding circumstances. There is no meeting of the minds if: (1) one side is obviously joking or bragging; (2) there is no actual agreement (for example, an offer is made and that party assumes their offer will be accepted, but it never actually is accepted); or (3) both sides have made a material mistake as to the terms or details of the contract.
Put our experience to work for you -- whether you are creating a contract or involved in a dispute, Scott and Scott will guide you through the process in a competent and courteous manner.