Studio City Attorney, Joann Deutch • (818) 753-9922
Practical Legal Pointers
How to Make a Contract Stick
By: Joann Deutch, Attorney
People enter into contracts all the time. The gardener and the homeowner have a contract, even if it’s oral. You and your brother-in-law are going to start a business. You may have either made a deal or put it in writing, or are working on a deal, and plan to put it in writing. The big question is what to write to be sure you can make the terms of the deal stick.
When you want to establish a relationship with another person, or a business, and it either involves a fair amount of money, or the you expect the relationship to last - you’d better put it in writing.
Why? By putting the deal in writing both sides are forced to think about the details. Both sides are forced to think about what they want from this relationship. If you don’t put these expectations on the table, then you run the possibility of either side saying, “Well, I didn’t mean that”. This is music to a lawyer’s ears. Someone has to work out your disagreement, and the lawyer is never cheap. In self-defense I might add here that most people who don’t know lawyers hate them, but when you’re in a fix we’re your BFF.
Let’s get to the Practical Legal Pointers:
All contracts must have:
● The names of all of the parties.
- It’s best to describe them too. Are they contracting for themselves individually, or are they contracting on behalf of a company? That’s why lawyers use the term “parties”. It can mean either one person, a company, or a group of people. Spell out who are the players.
- You should include an address where each party to the contract can be contacted. It’ll save you a lot of grief later.
● A lawful purpose.
For example a contract to have a hit man take out your “ex” is not legal. Trust me no Judge would enforce it. A contract to build an illegal addition to your house is not lawful, even though it happens all the time. The problem is that you “come with unclean hands” and a Court will not reward you.
● A description of what is to be done. We call this “ having all the material terms expressed with certainty”. California Civil Code § 1558
- Who is supposed to do what
- What are the terms of payment
- You should put in some language that talks about when the work is properly done, and who gets to decide that. Without any particular language in your deal, the law is that “if a reasonable person” would be satisfied with how the job was done, it’s over. A lot of lawsuits are based on, “I’m not satisfied.” Spell it out ahead of time. You don’t want the Judge or jury to decide what’s reasonable.
● The price for the contract needs to be reasonable.
- Think of it as a fair deal. It can even be a good deal, but not highway robbery. You can’t get away with a contract where someone agrees to pay $1,000 to build a 3 bedroom house. However, if someone has say a rare coin, a fair deal could still be a lot of money.
● The parties need to agree to the terms of the contract.
- Technically only one side needs to sign the contract, and that’s “the other guy”. Even if you didn’t sign it you can still enforce the agreement. However, the other guy might have a problem. We call it “signed by the party to be charged” – that’s going to be the Defendant.
- This might wind up with you being stuck with an “oral contact” instead of a “written contract”.
- This is also where the “material terms” come into play. If you didn’t spell them out, both sides may not have agreed to the same thing. Wham ! You don’t have a contract you can enforce.
● If an attorney is drafting the final contract language we will add “boilerplate” provisions.
- All changes need to be in writing and sign by both parties
- Will there be a clause that forces you to resolve all disputes by Arbitration – usually a less expensive road to a final resolution.
Think about using this as one of the clauses in your contract:
“This Agreement contains all of the agreements, representations, and understandings of the parties hereto and supersedes any previous understandings, proposals, commitments or agreements, whether verbal or written.”
If you decide to use a pre-printed contract form - say - off the internet, or from your industry, remember even though it’s a pre-printed form, you can change whatever you don’t like by adding a written Addendum.
Good Luck!
Joann Deutch is an attorney with offices in Studio City (818) 753-9922
Copyright ©2010, Joann Deutch. All rights Reserved
With Law Offices convenient to Studio City, Sherman Oaks, Valley Village, Van Nuys, North Hollywood and Universal City
(818) 753-9922
SKYPE JoannDeutch
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