Business Contracts Minnesota Business LawWhen 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?
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:
- consideration, and
- 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.
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.