Contract Management Software Blogs, Articles and News

What is Contract Definition? In simple terms, a ‘legally enforceable promise/agreement’ between two parties either in written or verbal is a contract. The terms of a contract are enforceable by law with clearly defined penalties and remedies in case of breach of contract. Although people keep using agreement and contract interchangeably, these two are different terms. Any agreement that is legally enforceable is called a contract. Also Read: Implied contract definition List of 6 Required Elements in a Contract Parties Offer Consideration Acceptance Registration Witnesses What are the elements required in a Contract? There are various elements of a contract that need to be in place. The contract creation process starts with two or more parties agreeing to an offer and a consideration for that offer. Then the details of the agreement are documented and signed off by all the parties involved. 1. Parties For a contract to be in place, there must be a minimum of two parties. A contract cannot be created with a single party. Generally, there parties are Institutions, Business Entities, Representatives and Authorized Individuals. Also Read: How to write a contract proposal 2. Offer One of the parties entering the contract needs to make an offer. This offer can be a service or a product or an action to be taken. Also Read: Signature guarantee vs notary 3. Consideration The second (or other parties) entering the contract needs to have a consideration in place. This consideration can be a payment or a service or an action against the offer made by the first party.Also Read: Benefits of contract management software 4. AcceptanceOnce both the offer and consideration are in place, both the parties ‘accept’ the terms. There might be a few iterations between the parties before finalization of the terms, but in the end ‘acceptance’ is a must for a contract to be in place. Generally, the ‘Acceptance’ happens with signature (physical or digital) of the parties involved in the agreement. The ‘sign off’ from all the parties entering the agreement creates a contract that is legally enforceable. Also Read: What is CLM 5. RegistrationSometimes as per the laws of the country, for certain agreements, the parties entering a contract need to get it ‘registered’ with an authorized person/institution. These contract clauses become legally enforceable only once they are registered with local authorities. This registration may come with additional fees to be paid to the government and executed on legal papers provided by the government. But this may apply to less than 2-3% of all the contracts. Also Read: Contract administration vs contract management 6. Witnesses For some contracts, there might be the need of having ‘witness’ to the contract to provide further ‘strength’ to the contract. Witnesses from both the sides signing the contract act as moral collateral for the parties signing the contract.You may also like: Can I notarize for a family member in NY For contracts signed through electronic signatures online, there is no requirement of having witnesses or getting the contract ‘registered’. The digital document created with sign-off from the involved parties is considered a contract. For creating, managing and tracking your contracts online, you can visit Legitt.What Makes a Contract Legally Binding?A contract must have four criteria in order to be binding: One party made an offer to another; something of value ("consideration") was offered in exchange for an action or inaction; the offer was plainly and unambiguously accepted; and both parties mutually agreed to the contract's conditions.Did you find this article worthwhile? More engaging blogs about contract lifecycle management blockchain, contract management software and electronic signatures can be found in the Legitt Blogs section. You may also contact Legitt to hire the best contract lifecycle management services and solutions along with free contract templates.