What are commercial contracts?

Commercial contracts or also known as commercial contracts, are the lifeblood of every business. They are a legal document that places one of the parties in a binding position to do something or not participate in the declared activity. It is used for businesses and organizations and its key requirement is to ensure that legal agreements allow the full benefits of the contract to be realized.

Also the terms of the agreement are established in the contract They cover all the important factors. In case one of the parties does not fulfill its part of the agreement, a breach of the contract occurs.

Commercial contracts that are not drafted correctly and have weak areas can undermine the agreement described therein. It is important to have a contract created by a lawyer to avoid loopholes and weaknesses before signing everyone.

Sign contracts with employees, owners, customers, and suppliers who agree to buy, sell, provide health insurance, or perform services. Verbal contracts are technically legal, but having a written and signed commercial contract is much safer. They cover commercial deals such as:

• Massive product sales or purchases
• Buy or sell a business
• Technical knowledge licenses
• Copyright

Types of commercial contracts

Commercial contracts can be verbal or written, but it is preferable to have a written contract as it is more difficult to enforce a verbal contract in court due to lack of documentation.

The contracts they can be formal or informal and they relate to any type of business activity, such as salaries, hiring and security. It is possible to execute a contract to establish terms with respect to any business activity as long as the components listed below are in the contract:

• Sales of goods, either retail or parts.
• Provision of services such as provider services and employment.
• Use of intellectual property, including patents, trademarks, copyrights, and trade secrets.
• The right of any party to disclose confidential information or enter a competition.
• Lease or purchase of real estate.

Advantage

Almost everyone knows that a contract, whether oral or written, is simply a legally enforceable agreement. But what does a contract and, in particular, a mercantile contract do in practice? This type of contract does three important things in the eyes of the law:

1.- Determine your rights and obligations

A contract determines the rights and obligations of people to which it links. When establishing those rights and obligations in a contract, let's say the right to receive delivery of a certain good and the obligation to pay for that good when arrives, those rights and obligations become legally enforceable and, therefore, determine how the parties to the contract must behave to avoid infringing the law.

In the same way, a contract too can change or completely revoke the rights and obligations that a person could have otherwise under the law. For example, by waiving any collateral in a contract for the sale of a good, the seller of that good, you can contract the implicit guarantees contained in the legislation for the sale of goods.

For those reasons, no contract should be taken lightly. It's important that you read your contracts carefully to make sure they don't take anything from you that you don't want them taken away and that they give you everything you want or require.

2.- Assign risk

A contract too it is a means of distributing risk among the parties. One of the purposes of any contract that is made is to try to anticipate contingencies and address them in advance in the contract.

In part, this means knowing what can go wrong and who is responsible for fixing it, what the consequences would be. In this way, you can accurately determine the risks of loss to one or both parties should something go wrong.

3.- Provides legal basis

A contract, as noted, is a legally enforceable agreement. That means that each contract has the weight of the law behind it. Therefore, if someone does not fulfill one of her contractual obligations, that is, if he breaches an obligation, that breach can lead to a legal claim for restitution by any section of the contract that has suffered a loss as a result of the infringement.

What is needed to create a valid contract?

To create a legally binding business contract, the agreement must contain four essential elements. They are as follows:

• Offer: An offer is a commitment from one party to another that promises to enter into a contract on set terms. It has to be specific, complete and capable of being accepted.
• Acceptance: Acceptance is the unequivocal agreement of the terms of the offer without any additional negotiation. A contract is formed when acceptance is communicated to the bidder. When the acceptance does not match the original offer, the recipient of the offer essentially rejects the original offer and becomes an offeror by making a counter offer. Acceptance of a counter offer means that the contract is formed according to the terms of the counter offer and not the original offer.
• Consideration: The consideration is the value exchanged by each party when entering into an agreement. For example, if you buy an item of clothing in a store, the consideration provided is the money you pay for the item. If there is no consideration, then there is no contract.
• The intention to create legal relationships: Unless the parties intend to enter into a contract, no legally binding agreement can be formed. Courts apply an objective test to determine whether there is such an intention. In commercial contracts, there is a rebuttable presumption that the parties intend to be bound.

Commercial contracts do not have to be in writing to be enforceable. However, if there is a breach of contract, having a written document facilitates the proof of what was agreed.

For a contract to be valid, both parties must have the ability to understand each and every one of the terms of the agreement and the consequences of signing it. Contracts that do not have clear, complete or unequivocal terms can fail for lack of certainty.