Business Contracts Minnesota Business Law

When entering into a business transaction, it is important to have a contract that will protect you and your business from any miscommunication or costly litigation. That is why it is important to have a knowledgeable attorney to draft or review any contract.

What is a contract?

Minnesota Contract Law

A contract is legally binding agreement where both parties are mutually obligated to perform consisting of 4 basic elements. With some exceptions, these are the basic elements of a contract:

  1. offer,
  2. acceptance,
  3. consideration, and
  4. mutual assent
An offer is when one party offers to exchange something of value like money or perform a service to another party in exchange for something of value. For example, person A may offer to sell person B 1000 bricks for $2.50 each.
Acceptance is when a person assents to an offer and agrees to perform to the terms of the offer. When, for example, person B agrees to purchase 1000 bricks from person A at a price of $2.50 each, person B has accepted person A’s offer. Consideration is value offered in exchange for performance of the contract. In the contract for 1000 bricks between person A and person B, $2.50 per brick or $2,500 total is the consideration in the contract. The money is the value exchanged for the bricks.
Minnesota Business Contract Attorney
The final element of a basic contract is mutual assent. Mutual assent means that both parties must be in agreement as to the basic terms of the contract. This may also be called a meeting of the minds. This means that both parties must know what is to be performed in exchange for the consideration. Thus, person A and person B must both know that they are exchanging 1000 bricks for a price of $2.50 per brick.

Drafting and Reviewing Contracts

Drafting or reviewing a contract is a small investment in time and cost that could save you thousands of dollars in litigation, business disruption, and other legal expenses. A well drafted contract will provide all parties with a clear understanding of what is to be exchanged and a clear understanding of what all parties’ duties are to each other under the contract. The first question to ask in drafting a contract is what do both parties want out of the contract? Almost always the answer is to transact their business with little or no hassle. The second question is what are you trying to exchange? For example, if a business owner is purchasing 400 tires at $50 a tire to replace the tires on their delivery vehicles then it may be prudent that both parties know that the tires they are purchasing are the right size or type. The business may be a courier service with sedans, but the seller delivers tires for vans. A good contract can avoid disasters like this example by specifying exactly what is to be exchanged. Moreover, the contract in the above example does not specify when the tires are to be delivered, or how payment is to be made, any warranties, or any other items meant to protect the parties and make the transaction go smoothly. The above example is why it is important to have a knowledgeable attorney review or draft your contracts. Because an ounce of prevention is worth a pound of costly litigation. At Kampmeyer Law, we utilize alternative fee structures to let you do business instead worrying about the running clock. Call us today at (763) 458-5145 or reach out via our online contact form.