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Verbal or written, legally enforceable agreement between two or more parties is called a legal contract. It typically involves one party making a promise to another in exchange for a specified benefit. If the agreed-upon promise is not kept, or the benefit is not given in exchange, the party harmed by this breach can seek legal recourse. Our team of legal professionals here at Raich Law PLLC can assist you with the proper formation of many different types of contracts and or dealing with a breach of contract.
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BILATERAL VS. UNILATERAL CONTRACTS
A contract can be bilateral or unilateral in nature. A bilateral contract involves two parties: each party makes promises to the other. For example, when you sign a contract for a new roof installation with roofing contractor, your roofer promises to provide your home with a new roof. You promise to pay your roofing contractor a specified sum of money once the installation is completed.
In a unilateral contract, one party makes a promise, but in exchange for an act by the other party rather than a promise. A car insurance policy is an example of a unilateral contract. When you buy liability insurance for your car, you pay a premium. This payment is an act, given in exchange for the insurance company’s promise to pay any future claims. If the insurer reneges on this obligation, you could sue the insurer for breach of contract.
HOW DOES A LEGAL CONTRACT WORK?
To be considered a legal contract, an agreement must meet ALL of the following requirements:
- Legal purpose: A contract must have a lawful purpose in order to be enforceable. You cannot have an enforceable agreement with someone to do something illegal.
- An offer must be made by one side and accepted by another; mere advertisements, for example, generally are not enough.
- Mutual agreement: All parties to the contract must have reached an agreement.
- Consideration: Each party to the contract must agree to exchange something of value for a benefit, such as work performed in exchange for payment.
- Competent parties: The parties to a contract must be: of sound mind, of legal age, and free of the influence of drugs or alcohol. If you enter into a contract with a person who is not competent, the contract may be unenforceable.
- Genuine assent: All parties must enter into the contract freely and of their own volition. A contract may be voided if one party has committed fraud or exercised coercion or exerted undue influence on the other in order to obtain the agreement. Contracts made under duress may not be valid. Also, a contract may not be enforced if one or more parties have made a mistake.
In addition, some types of contracts are required to be in writing, such as contracts of marriage, sale/purchase of land, etc.
WHAT IS A BREACH OF CONTRACT?
If one party fails to fulfill the promises of the agreement, that party has breached the contract. Let’s circle back to the roofing contractor example. Let’s say that you have paid your roofing contractor half of the agreed-upon amount for your roof upfront. However, after installing part of your roof, your contractor stops showing up and does not finish your installation. By failing to fulfill their promise to provide you with a new roof, the contractor has breached the contract.
One party may suffer a financial loss if another breaches the contract. There are a few options for obtaining compensation:
- You can sue for damages. You could file a lawsuit against the contractor for damages. For example, you might sue for the cost of repairs caused by damage to your home incurred by having an incomplete roof, the cost of hiring another contractor to finish the job, as well as any additional costs you may have incurred due to the delay.
- You can sue for specific performance. This means you may be able to legally compel the contractor to complete the work required and specified by the contract (not a common remedy as courts don’t like to force parties to do undertake work by Court Order).
- Other legal recourse: If the contractor obtained the contract by fraudulent means or exercised force to obtain the contract, you may be able to convince a court to amend the terms of the agreement or even terminate the contract.
Failure to fulfill the terms of an insurance policy may constitute a breach of contract. However, you also have obligations under the agreement. You are required to cooperate with your insurer when it investigates a claim. If you file a claim and then do not cooperate with the insurer’s investigation, this may constitute a breach of the insurance contract. Your insurer could use your breach of the contract as its basis for denying your claim.
As contracts are legally binding, it’s extremely important to make sure you are protected. The Las Vegas attorneys at Raich Law have your best interests in mind when we oversee, review, and execute contracts on your behalf. Ensure you are absolutely covered before you enter into any agreement. Raich Law has multiple offices in Nevada and California to serve your needs. Please call 702-758-4240 for an appointment or email us at firstname.lastname@example.org.