The elements of a contract

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If you have a business, you’ll sign tons of contracts. Toronto lawyer Jonathan Kleiman spoke with us about making these agreements, and when you need them. 

Your relationships 

You need a contract for almost every business relationship, including clients; partners; employers; employees; investors and suppliers. These agreements can be as short as one page, but usually average around 30 to 40. Sound like a lot? It is, but you need to protect yourself legally when it comes to running your own business. Kleiman advises developing a contract even if your partner is a close friend or relative. “You don’t necessarily have the contract because you will enforce it in court,” he says, “You do it so you have a written set of rules you can both agree to. What happens if you split up [as partners]? If you make a million, will you grow or sell?” Kleiman says he’s seen clients who want to sue their sibling. It can happen even if you think you’re close, because business and family relationships are different. Make sure you both agree on the terms of a contract. 


Contracts are different depending on who and what is involved, but Kleiman says there are three basic elements: Offer, Acceptance and Consideration.  

The offer outlines the agreement details; the acceptance indicates that you and the other parties agree; and the consideration is what you get in return for the agreement. For example: “For the consideration of $2,000, Acme Web Design will deliver a fully functional website within 60 days from the agreement date.” The contract should outline everything about the relationship.  Keep in mind that a verbal promise is different from a written contract. Both can hold up as legal agreements in court; however, it’s more difficult to prove details about an oral agreement. Texts and emails are similar, so writing it down is your safest option. A contract also must be paid. If you agree to do something with no consideration, it’s simply an unenforceable promise. List every detail of how the relationship will work, including payment terms; delivery times; expectations of quality; accessibility; hourly rates and taxes. If in doubt, have a lawyer write-up your agreement.