RUNNING HEAD: Contract Basics 1
Contract Basics
Todd Lark
Eagle Gate College
Business Law and Ethics
Contract Basics 2
Contracts are a very important part to the business world. They give the opportunity for
growth with the promise for future work. They also lock in pricing for production materials. On
the other hand, when a contract is done poorly, it can cost a company profit and more depending
on the severalty of the remedy for a breach.
A contract is formed when the parties intend to be legally bound by their promises. Both
parties need to clearly agree to what those promises are. A contract is an agreement between
parties that creates an obligation to do, or not to do, something.
In order for a contract to be valid it must contain criteria; an agreement, consideration,
capacity, legality, form, and voluntary consent.
