Contracts

Contracts are legally binding agreements between two or more parties where the parties have understood what they were doing and had the legal capacity to understand what they were doing.

The circumstances of contractual disputes vary depending on the circumstances of each situation; however, some common examples of contract disputes are about:

- Employment agreements;
- Finance and loan agreements;
- Agreements dealing with the purchase or sale of property;
- Shareholder agreements;
- Contractor agreements; or
- Agreements for the supply of goods or services.

Generally, these types of matters involve disputes over the breach of particular terms within a contract or the meaning of particular terms within a contract.

Every contract must have an offer, an acceptance, competent parties and consideration. Competent parties means that the parties involved understand that by signing the contract, it becomes legally binding. Consideration refers to the exchange of goods or services between the parties involved.

Contracts can be written, oral or a combination of both written and oral terms. However, it is recommended to have a written contract so parties involved can ask questions about the terms before they sign. Written contracts also provide the court with exact terms of the contract if a lawsuit occurs.

A breach of contract occurs if one party doesn’t perform their required obligations under the contract. If you breach a contract you can be exposed to a number of different actions from the other party. Court imposed actions often result in an award for damages for financial losses.

In order for a contract to become legally binding, certain conditions must be met. These are:

- All parties involved in the agreement intend to form legal relations;
- One of the parties makes an offer which is accepted by the other parties;
- Consideration is given for the offer; and
- All parties involved in the contract have the legal capacity to be able to enter into a legally binding contract.

If a contract does not follow the conditions that make it legally binding, it may not be enforceable. A contract can also not be enforced if:

- The contract contains an agreement to do an unlawful act;
- The contract breaches other legal requirements; or
- The contract contains agreements between family members the parties involved did not intend to legally enforce.

Before you sign a contract, you should read it thoroughly either by yourself or alongside a lawyer. You must understand the terms of the contract clearly and what your legal rights and obligations are. This step is important because once you sign the contract, it is legally binding and enforceable.