Contracts are the foundation of businesses as they explain the responsibility and rights of the parties involved. Further, they have crucial clauses that provide in-depth details, eliminating the chances of misunderstandings and disputes. A contract should be legally enforceable – anyone who signs it should fulfill its terms and conditions. Failure to do so may constitute unlawfulness.
However, your agreements may not be as binding as you believe. Here are elements that may make your contracts voidable.
A contract should be as clear as possible. Examples of information that should be explained clearly include duties of each party, payment rates of employees, dividends for shareholders, profit-sharing/ ownership percentage for partners, what is expected of suppliers, confidential information, actions that may lead to termination, notice period and contract length.
Avoid using open-ended language or timelines, and encourage parties to ask questions before signing any contract.
Lack of contractual capacity
Every party you are in business with should sign contracts in their mental capacity. When someone who is a minor, intoxicated or with psychological disabilities signs a contract, they may not be bound by it.
However, it may be hard to control this as most people sign contracts at home, and at times, you may not know of a party’s disability if they don’t disclose it. Thus, consider getting professional guidance to get around this issue, preventing parties from voiding contracts in the future.
Your contracts should have terms and conditions consistent with Ohio and federal laws. If your agreement is not legal, it may not be binding. Ensure that you and the other parties are protected by law.
Business contracts may be deemed void due to different reasons. You should be informed when creating contracts to protect your rights.