The contract process is one of the parts of business that people look least forward to, yet it is one of the most critical. Contracts are at the core of any business relationship and transaction. It makes no difference if we are talking about a consultant offering a specialized service to a company or suppliers selling goods to customers on an e-commerce site.
What Constitutes a Contract?
A contract is a binding agreement between two parties that states what the parties are required to doing the relationship. Written contracts serve to memorialize the agreement. They provide clarity and help avoid the risk of either party forgetting the exact terms of a verbal agreement.
A contract includes four basic essentials:
- Consideration – something of value that passes between the two parties
- Offer – the value proposition made by one party
- Terms – the details of the deliverable, such as how it will be executed, the anticipated timeframe, and what it will encompass
- Acceptance – made by the recipient party upon agreement of the deliverable
Digital Contracts Are No Less Valid
This might come as a surprise: The medium or format a contract is drawn on does not affect its enforceability (except when dealing with real estate, which must be in writing). In a court of law, an agreement is a binding contract if it has the elements above However, the recipient must be aware that they are entering an agreement.
Is the Agreement Unambiguous?
Take for example a digital contract like you see when installing new software that requires you to click a button that reads “I Agree.” Before clicking that button, which is the equivalent to a signature on paper, consider if you were given the opportunity to read the entire contract. If so, this may mean a clear assent of entering a binding agreement was available regardless of whether you read it thoroughly, skimmed it, or ignored it completely.
As recipient, understanding the agreement is your responsibility. It doesn’t hurt to print a digital contract to review thoroughly before agreeing to it.
Emails Are Binding
According to Richard Levin, shareholder at with law firm of Hall Estill, emails are enforceable as binding contracts no matter how quickly they were written or how brief, especially when an offer and an acceptance are included. Suppliers and other business professionals should take care in how and what is communicated in emails, always striving for clarity and professionalism.
Levin recommends that you always realize and take into consideration that the content in an email can be publicly displayed and used by a third party. This is not to say you would become subjected to a leaked email scandal, but your emails can be used as contractually binding evidence in legal disputes.
Never Hesitate to Seek Professional Consultation
Always remember: The recipient is responsible for reading and understanding the entire contract before agreeing to it no matter whether it is transmitted as a complete document; web display; or email. If you find a contract difficult to understand, or you are not comfortable with the terms and deliverables, contact an attorney to help you make an informed decision.
Click here to watch Richard Levin’s interview on Focus on Suppliers.
