Which Contracts Are Enforceable in California?
According to a study by Cottrill Research, about 60% to 80% of business transactions are governed by contracts. When two or more parties or entities are involved in a business transaction, contracts are often established to outline the duties, rights, and responsibilities of each party or entity. Also, contracts may also be entered into when accepting new employment, completing a real estate transaction, and other lawful activities. However, there are various elements and requirements that must be met to ensure that a contract is valid, legally binding, and enforceable.
Attorney David Schwartz is committed to offering knowledgeable and experienced legal guidance to clients in commercial litigation and business contract-related matters. Mr. Schwartz is available to enlighten you about the types and basic elements of a valid contract and what to consider when drafting an enforceable agreement. The firm is proud to serve clients across San Francisco, San Mateo, San Jose, Santa Clara, Alameda County, Oakland, and the San Francisco Bay Area, California.
What Is a Contract?
A contract is a written or oral agreement between two or more parties or entities – involved in a deal or transaction - that is legally binding. The contract outlines the legal rights and responsibilities of the parties involved, and it is intended to be enforceable by law. In addition, the contract creates an obligation that must be – or not – performed by the contracting parties – or risk liability or legal action for defaulting.
What Makes a Contract Enforceable?
Here are some of the basic elements of a contract that makes the agreement legally binding and enforceable:
Offer – One party must propose an offer to the other party.
Acceptance – The other party must accept the offer.
Legality of purpose – The agreement must be for a legal purpose.
Consideration – Each party must contribute a value to the contract. For instance, monetary payments, exchange of goods and services, or work performance.
Competency and Capacity – The parties involved in the agreement must be legally competent, of sound mind, and have the capacity to enter into a contract.
Additionally, the contract must be properly drafted, and all involved parties must agree to the terms and conditions of the contract voluntarily. In some cases, the contracting parties may need to negotiate fair terms of the agreement before the contract can be signed and finalized.
Types of Contracts That Are Enforceable in California
Here are the various types of contracts that are enforceable in the state of California:
Employment Contracts
Fixed-term contract.
Self-employment contract.
Agency staff or temporary employment contract.
Full-time or part-time contract.
Apprentice agreement.
Internship employment contract.
Zero-hour contract.
Real Estate Contracts
Purchase agreement or sale contract.
Contracts for deed.
Lease agreements.
Power of attorney contracts.
Sales Contracts
Sales agreements.
Master Service Agreement (MSA).
Order forms.
Change order forms.
Terms of service.
Statements of work.
Renewal and upsell agreement.
Business Contracts
Employment agreement.
Bills of sale.
Licensing agreement.
Purchase orders.
Non-disclosure agreement.
Employment agreement.
Indemnity Agreement.
Property and equipment lease.
Promissory note.
Partnership agreements with other businesses.
An experienced attorney can inform you about some vital considerations when drafting a contract and help you navigate crucial decisions.
More Things to Consider
Here are some additional considerations to help ensure that your contracts are enforceable:
California Statute of Frauds
Under California Civil Code Section 1624, certain contracts – including marriage, real estate, broker, lender, debt repayment, sales agreement, and agreements that take over a year to complete – must be in writing.
Written vs. Oral Contracts
Both oral and written contracts that meet the necessary requirements are legally enforceable in California. However, proving an oral contract in the event of a breach may bring about various challenges. Moreover, oral contracts have a two-year statute of limitations, while written contracts have a four-year statute of limitations.
Duress and Undue Influence
For a contract to be valid and enforceable in California, all parties must enter into the agreement voluntarily. If one of the contracting parties can prove that they entered into the contract under duress, coercion, or undue influence, the court may cancel or revoke the contract.
Capacity of Contract Participants
Only parties who are legally and mentally competent and of sound mind can enter into a contract. A contract signed by a minor or mentally incapacitated person isn’t enforceable in California.
Approval
Also, all contracting parties must clearly indicate their approval in the contract’s terms for it to be binding and enforceable.
A dependable attorney can help draft your contracts and ensure that they are valid, legal, and enforceable.
Seek Skilled Contract Representation
Ensuring that your contracts are properly drafted, legal, and enforceable is crucial to mitigate possible issues and protect your rights. Attorney David Schwartz has devoted his career to guiding clients through the complex procedures involved in drafting business contracts. With his broad knowledge, Mr. Schwartz can help draft, review, and negotiate all your contracts. Also, David will help ensure that your contracts are valid, binding, enforceable, and meet all procedural requirements.
Contact the Law Offices of David H. Schwartz, INC, today to schedule a simple consultation with a seasoned corporate litigation attorney. Mr. Schwartz has the resources and trusted advocacy you need when drafting and negotiating your business contracts. The firm is proud to serve clients across San Francisco, San Mateo, San Jose, Santa Clara, Alameda County, Oakland, and the San Francisco Bay Area, California.