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The validity of a contract is unknown until it’s challenged

| May 29, 2020 | Business Law And Litigation |

Many California business people pride themselves on their word being their bond. This serves as a foundation for how they conduct business. Nevertheless, business contracts have become increasingly more important when liability issues arise from agreement violations between parties. If the parties continue to operate in a manner agreeable to both, the terms of a contract don’t need to be disputed. If one or both parties feel aggrieved, however, a lawsuit may be initiated where the validity of the contract and the meaning of its terms come under scrutiny.

Business law professionals say that a well-crafted contract lays out the rights and responsibilities of the parties and contains various clauses and language that anticipates potential events that may occur. To the extent one of those eventualities becomes a reality, the contract terms might provide guidance for the parties. Of course, if the exact event as written in the contract does not occur, there may be different interpretations regarding what is expected. For instance, a contract may anticipate an inability to perform due to some external event, yet few contracts would specifically mention a global pandemic.

However, before the specific language regarding a relevant topic can be evaluated, the contract must be deemed valid following basic contract formation rules. Issues such as offer, acceptance, consideration, a valid contract purpose, equal bargaining position and competence of the parties are among those to be examined. Although some contracts must be in writing to be enforceable, many oral contracts may be valid. However, written terms are easier to prove.

A business that can minimize its exposure to lawsuits may be in a better position to focus on profitability. An experienced business attorney can help facilitate that goal.