The Five Basic Elements of a Business Contract

Written by Adam Peck Category: Injury Law January 16th, 2013 3 min read

In many of our activities, we have already encountered contracts. The contract contains the details agreed upon by the parties involved in the project or any agreement. A contract is a legal document and can be used as evidence in the court. That is why a contract should be well made and the details in them should be clear and complete. Both parties should also be able to understand what is written in the contract. If you wish to make a contract or you are about to sign a contract, it is best if you consult a lawyer. It may mean more expense for your part but it will also save you from any problems in case the contract is faulty. But either way, it is still best that we know what a contact must have says California Business Attorney Steven C. Peck.

A basic contract usually has five elements in it and we will discuss each of it in details.

The work to be done for the project should be clearly stated in the contract. The work the contractor would do and will not do should be indicated in the contract. The work to be accomplished should be clear to both parties to prevent any misunderstanding.

The time limit of the project is also a very important aspect. In construction projects where the time is of essence, the contractor should be able to meet with the deadlines. In some contracts, a penalty is usually included in the clause if the contractor will not be able to meet the deadline and a bonus is also given if the project is ready before the deadline.

The payment clause of the issue tackles the monetary issue in the contract. Some contracts are paid in a fixed price while others are paid by computing the cost of materials and the time spent on the project. The manner on how the payment is to be done (either monthly or weekly or so forth) and when the payments should be made are also specified on the contract. The arrangement of the payments should be agreed by both parties to satisfy the quality of the work done.

The contract should also address any confidentiality issues and reporting of the progress of the project. The contract should state all the information that the contractor should not divulge in any circumstances. The information should also be kept just between the contractor and the buyer. Information should not be divulged for the buyer’s benefit unless you discover it to be illegal and proper authority should be contacted. The progress on the project can also be reported to the buyer only unless stated otherwise in the contract.

Warranty and subcontractors on any project made is also indicated in the contract. Warranties are also just valid for only a year. This is to ensure that any services done will be of high quality and done in a timely manner. If a subcontractor will be needed for the project, the buyer should know of it and have a list of the subcontractors. The buyer must first agree on the subcontractors before she signs the contract and then the project can be a closed deal!

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.