In your mind, you are owed $160 per night.īut then the business owner recalls the $40 per hour part of the agreement, and disputes that the agreement was for $40 per employee. You provide two employees, who take 2 hours to complete the job. You contract with a business to clean their building nightly, at a rate of $40 an hour per employee. Imagine, for example, your business sells cleaning services. Because contracts are legally binding, if the other party fails to meet their obligations, you have the right to legal recourse. When you have a business contract reduced to writing, you have a clear road map detailing what you and the other party to the contract agreed to. The Consequences of Not Having a Business Contract Consequently, it is best to write out the agreement. Reducing agreements to writing is not always required for a legally binding business contract, however, when agreements are not reduced to writing, some confusion may occur.
In this example, there is not yet a meeting of the minds, and therefore no contract.
If the business owner says, instead, “I will pay you $35 an hour for your cleaning service,” this is a counteroffer. Both parties must agree to the terms of the offer and acceptance. When the business owner says, in effect, “I will pay $40 an hour for your cleaning services” that is an acceptance of the offer.Ĭonsideration is the exchange, in this case, of money for services. For example, “I will provide cleaning services for your business at $40 an hour” is an offer. In business, contracts are typically either sales agreements, for the sale of goods, or service agreements, for the sale of services.Īn offer is the basis for the contract. The contract can be as long or short as necessary in order to cover the important details of the contract.Ĭontracts are legally binding on the parties who sign them. Business contracts protect both buyers and sellers, by reducing agreements to writing.