I would always recommend that agreements be in writing. If an agreement is in writing, it makes everything easier to understand. An agreement in writing memorializes what two people agreed upon. The act of writing down the agreement, signing it, and attesting to it makes an agreement more concrete. However, that doesn’t mean that people cannot agree outside of a written agreement, alter their agreement, or decide to mutually cancel their agreement.
When thinking about written and executed agreements, one thing to always consider is the statute of frauds. The statute of frauds is a requirement by law that certain agreements be in writing and signed by the party to be charged. However, those are very specific circumstances where something actually has to be in writing.
Some examples may be, a lease that’s longer than a year has to be in writing guarantor contracts, real estate transactions, and commercial contracts for sale of goods. If two people are in business together that involves the sale of goods over $500, it typically has to be in writing to be enforceable. Even though there are some specific areas where a written and signed contract is required by law, one should always err on the side of having a written agreement in case a dispute or disagreement does arise in the future.
How Does A Mistake Made In The Drafting Of A Contract Affect The Enforceability Of An Agreement?
A mistake can invalidate a contract depending on the error and specific circumstances around the contract and parties. When it comes to mistakes, there are mutual mistakes and unilateral mistakes. A mutual mistake refers to the concept that both parties were part of the mistake. If both parties made the same mistake, a legal analysis is required to determine the potential outcome based on the applicable law. For instance, did they even have a contract? Is it such a big mistake that it affects the contract at an inherent level? Does it go against the whole agreement? Or, is it something that is minor that can be fixed or amended? Can the court jump in and help make the situation better? Then, there are unilateral mistakes. A unilateral mistake refers to when one party makes a mistake and the other party relies on that error. A lot of facts have to be considered, and depending on the facts, it may or may not affect the enforceability of an agreement. As these legal issues become very fact specific it is always best to have a professional contract attorney review your agreement and factual situation to determine a plan of action.
What Is A Breach Of Contract? Can We Draft A Contract To Avoid Potential Breaches?
A breach of contract occurs when someone doesn’t perform or do something they are supposed to under a contract. A breach of contract can also occur when someone does something they are not supposed to do under a contract. Unfortunately, you cannot always avoid a breach of contract. And controlling another party’s behavior is problematic. So if a party decides to breach a contract, or if a party decides to sue you based on a contract, it doesn’t matter if they are wrong or if it’s frivolous. They can utilize the system and file a lawsuit or complaint against you. Correspondingly, you have to get on the defensive side, make the claim that their complaint is frivolous, and ask for sanctions and attorney’s fees. There are other avenues to deal with it. However, once somebody takes that action, the next step is to respond to their action.
To help avoid or mitigate potential breaches, it is recommended to have a liquidated damages clause. A liquidated damages clause avoids litigation. Litigation can be very costly, especially if experts are involved. For instance, if there is a business dispute between two business parties about damages, an expert may be needed to assess the damages. A such, the expert will need to be paid. Ultimately, litigation can be a long process that costs money. Whereas, if a business can utilize a liquidated damages clause, it can help deescalate a dispute without the need for litigation. For example, a liquidated damages clause can say that the parties agree upfront that the damages will be 15% of the contract if a party cancels the contract or breaches the contract. Or, parties can have a stepped liquidated damages clause in which the agreement indicates how much the damages are going to be if one party cancels or breaches the contract at a certain point down the line.
A liquidation damages clause is one way to help mitigate a breach of contract. However, when it comes to a specialized situation, such as special services, having a liquidation damages clause may not be of much use. For example, hiring a unique or specialized talent like an actor, musician, or somebody with unique abilities and services that you cannot get anywhere else, a liquidated damages clause is not going to help since that specialized service or ability is needed. In the United States, you can’t force anybody to do anything labor wise because of the constitution. However, you can stop them from doing something else. You can use injunctions and other stipulations to stop them.
For instance, If an actor does not want to work and show up to the set anymore, but they have a two-year contract that they agreed to, an injunction to stop them from working elsewhere can be obtained from a court of law since they are breaching the agreement. This is just another example of dealing with a contractual breach.
Generally, disputes in the United States settle. However, if you do find yourself in litigation with respect to a contact or agreement, you are going to want a well written and protective contract in place prior to remedy your damages and protect your business or interests.
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