There are two forms of partnerships: a general and a limited type. Both of these are subject to special authorizations when undergoing a contractual process. In a general partnership, in order to complete a general contract, all partners must consent. The contractual processes may be handled and performed by a separate entity, if hired to do so, on their behalf.

A review of partnership agreements is a necessity in order to ensure that each agreement was valid if all the members’ consents were not given. A partnership is formed with two or more people who are looking to earn a profit. Within the partnership, there is a superior partner, who has more liability than the other partners due to their co-signing or amount of investment put forth.  

The Uniform Partnership Act establishes rules and standards for partnerships, A partnership is not a taxpaying entity; it is a tax reporting entity, forming a pass-through taxation which is a key perk. There is a joint liability amongst all the partners for their partnership’s obligations. 

In a limited partnership, there are also two types of partners: limited and general. The limited partners have just as much authority in most cases, but they lack the authority to override decisions and commit agreements on behalf of the partnership without the consent of the general partners. The limited partners also have limited liability, where they are not as liable as general partners. Thus, the main decision-making is in the hands of the general partners.

General contracts need to be approved and agreed upon by all general partners. Approval is also needed from limited partners in a majority of the agreements, unless they are not present. General contract review is necessary at the end of each quarter in order to ensure that each agreement was done not only legally, but also with the approval of the general partners.

If a general contract is not approved by a general partner due to their absence, those general contracts are also overlooked at the end of the quarter in order to make sure that the general contracts were agreed upon by the other general partners within the partnership.

General partners owe more liability to the partnership either because they were appointed as a general partner, they had put up more of an investment, they have more capital in which the other partners stay protected, or because they are more experienced and the partnership revolves around their expertise.

General contracts are to be signed by majority of the partners, all of them if possible. If there is a debate to whether a general contract should be signed, it goes into a voting system in which the limited partners’ votes may count as 1 vote, while the general partners may count as 1 1/2 or 2 votes each. This method is designed to maintain an equilibrium within the partnership and to ensure that the partners with more expertise have more of a leverage when it comes to voting on general contracts.

An agreement is the second essential step in creating a contract. An agreement represents the acceptance of an offer made by another party. When an agreement is reached, it means that the two parties to a contract have agreed to terms and have decided to become bound to perform the actions in the contract.

In the past, this agreement was known as a “meeting of the minds,” but this has fallen out of favor in court rulings over the last century. Instead, an agreement in a formal contract is now recognized by the signing of a contract. In an informal contract, which is a contract when signatures are not exchanged, acceptance is demonstrated by the actions of the two parties. In a bilateral contract, agreement occurs when the two parties accept the obligations placed on them. When a unilateral contract is in effect, agreement occurs when the offeree completes the action requested by the offeror. 

The “meeting of the minds” as a standard for recognizing agreement has fallen out of favor due to the recognition that a court cannot assume to know what is within the mind of any individual. As a result, the court cannot possibly interpret the intentions of any party to a contract at the time they enter into the contract. The standard that the courts have adopted instead is a reasonable person test. The reasonable person test is designed to guard against any agreement which would be detrimental to the person agreeing to the contract.

In order to accurately understand the concept of agreement, it is crucial to understand when a valid offer has been made. An offer is made when a party, known as the offeror, presents terms of a contract to another party. The party that receives the offer is known as the offeree. If the offeree accepts the offer, the two parties are considered to be in agreement. 

In contrast are offers of “invitations to treat.” Invitations to treat are not offers. Invitations to treat can happen in a number of ways. Some of the most common include the display of goods in a store window, an auction without reserve, the solicitation of competitive bids, or advertisements for goods.

Except in specific circumstances, an auction does not constitute a legally binding offer and agreement process. An auction can be held with or without reserve. An auction without reserve is the rarer of the two kinds. An auction without reserve means that the item will automatically be sold to the highest bidder regardless of the price. An auction with reserve, or reserve auction, is an auction in which the person putting the item up for auction has stated a price below which they are unwilling to part with the item, or circumstances under which they “reserve” the right to not complete the exchange of goods.

Auctions present interesting situations when considering offers and agreements. In an auction without reserve, the person placing the goods up for auction is obligated to accept the final bid. Each bid during the auction represents a new offer. Each higher bid that the auctioneer accepts means that the offer represented by the previous bid is invalidated. During a reserve auction this can create some complications.

If the person placing the goods up for auction decides against accepting the highest bid, they are left without an alternative. Even if the person would rather accept the second highest bid represented, they are unable to do so because the higher bid caused the previous bid to become voidable.

Advertisements are not considered to be offers because they may oblige the person creating the advertisement to sell more goods than they possess. As a result, an agreement cannot be reached as the result of an individual responding to an advertisement. Advertisements are technically considered “invitations to treat.” However, there are circumstances in which an advertisement can constitute an offer. 

The Nineteenth Century case of Carlill v. Carbolic Smoke Ball Company in England involved a promise by Carbolic Smoke Ball Company to pay £100 to anyone who used their product but still developed influenza, which their product was claimed to prevent. As guarantee of their claim, the advertisement said that the company had deposited £1000 in an account to pay anyone who caught the flu.

The advertisement was considered to be a unilateral contract. The agreement by Louisa Carlill was twofold. The first part of the agreement can be seen in her purchase of the smoke ball, and the second element of agreement was her continued use of the ball. 

The English Court of Appeals ruled that the advertisement became a legally binding contract on several grounds. The most relevant part of the ruling was that while an offer existed between the company and the entire world, a contract only existed with those individuals who had taken the actions to accept the terms of the offer. Acceptance in this case is interchangeable with agreement. This case also cemented the idea that conduct was sufficient to convey agreement with the terms of the advertisement’s offer.

Agreements to agree are not considered legally binding. These legal documents only reveal that the concerned parties are considering a future contract. In and of themselves an agreement to agree does not mandate action on the part of either party. Agreements to agree arise when two parties are discussing an event involving future transactions which are still in progress. A statement of future intent is not a legally binding contract. It only indicates an agreement by the two parties involved in the negotiation to attempt to form a future contract. An agreement to agree is not binding if the matter under discussion is still in dispute. 

An agreement to agree may be considered a contract, however, if the material terms of agreement are present. Agreements to agree can become legally binding agreements if they contain all the typical elements of a contract. If, however, an agreement to agree merely records the terms that have been discussed in preliminary negotiations, or they can be given the full weight of a contract to which both parties have agreed. Agreements to agree are sometimes known as letters of intent. Whether the document is titled an agreement to agree or a letter of intent, the legal significance of the terms is equal.

In order for agreement to occur, the offeree must have an intention to enter into the contract. Intention can be interpreted by action or by verbal acceptance of the terms provided by the offeror. Intention also extends to the offeror. The offeror’s intentions are rarely subject to question.

Intention to form a contract is one of the requirements to form a contract. Intention to be legally bound by a contract does not exist during the initial negotiation of a contract. Courts generally do not assign intention to either party by their interpretation of the parties’ statements of future intent or by agreements to agree.

There are several circumstances under which an agreement or an offer may be rescinded. The first way to rescind an offer is to attempt to change the offer. Any attempt to change an offer is known as a counter-offer. If a counter-offer is presented and subsequently rejected, the execution of the original offer cannot be compelled by a court of law. Unless the counter-offer contains a provision specifically authorizing it, any previous offer becomes invalidated. 

Contract negotiations are often lengthy processes. If during the negotiations one of the parties discovers that the information being discussed in the negotiations is substantively different than has been presented during the negotiation process but fails to disclose this information, it may serve as grounds to invalidate the other party’s agreement. If, however, the information in dispute is an expression of opinion, it may be found to be false without invalidating the contract negotiations. Expressions of opinion are not given equal weight to other elements of preliminary negotiations.

Option contracts are contracts in which the offeror, or promisor, is limited in their ability to withdraw or rescind a contract. An option contract is an important element of a unilateral contract. Traditionally a unilateral contract is only formed when the action under consideration is completed. This is an issue because it provides no protection to an offeree who has completed the partial performance of the contracted action before the offeror withdraws the contract under discussion. 

An option contract transforms an unilateral contract into a bilateral one because it provides some guarantee to any party providing agreement to the contract that their actions will receive compensation. The compensation may begin immediately after the action has begun, or may only come into effect once a significant portion of the work is completed. 

The party which has engaged an action leading to the partial performance of the contract may be able to claim detrimental reliance upon the belief that the offeror would provide payment. For instance, Mike hired Steve to paint the walls and ceiling of his room for $100. Mike told Steve to leave after Steve had finished painting the four walls, and was in the middle of painting the ceiling.

Under a traditional unilateral contract, Steve would not be entitled to any of the $100 because the money was provided as consideration for the completion of the task. Steve, however, could compel Mike through promissory estoppel to compensate him for the partial performance of the task. Steve undertook the actions under a detrimental reliance that Mike would allow him to complete to task.

Option contracts are related to the ideas of promissory estoppel and detrimental reliance. In contract law, promissory estoppel and detrimental reliance apply if the actions a party has undertaken by the offeree while under contract would be unfairly detrimental to the interests of the offerree and would unjustly enrich the offeror. As a general legal principle, estoppel is meant to halt any action which would be unfair to the interests of one party in comparison to another. 

As in the above example, detrimental reliance comes into effect in instances of partial performance of unilateral contracts because the party fulfilling the actions which complete an unilateral contract have a detrimental reliance upon the party offering the contract to adhere to the terms of the contract. Promissory estoppel applies because it seeks to “estop,” or halt, the offeror from withdrawing their promise of consideration.

Option contracts are usually found in real estate. Real estate option contracts exist primarily for the benefit of the buyer. The buyer in a real estate option contract is allowed time to secure financing, to arrange for a contractor to examine the land, and to investigate relevant zoning laws governing the property. Real estate option contracts do not oblige the buyer to grant agreement to the seller’s offer. Agreement in real estate contracts can be withheld by a buyer looking to make money off the land. Real estate option contracts often have a short period of time before the terms laid out in the contract lapse.

There are several ways in which an irrevocable offer can be terminated. The first way to terminate an irrevocable offer is for the offerree to reject the offer, either by denying it or by presenting a counter-offer. The second way is for a period of time laid out in the original offer to expire. If the offer states that it must be accepted by a certain time, but it is not, then the offer to provide agreement to the contract is considered terminated. 

An irrevocable offer, or any other offer for that matter, can also become unenforceable in several other circumstances. If the party who offered the contract dies or becomes legally barred from entering into a contract, such as due to any form of disability, then the contract cannot be agreed to or accepted.

If the person who has agreed to the contract also dies or becomes incapable of entering a contract, then the contract may also be declared unenforceable. If the contract subject to agreement is related to an illegal act, then it is considered void. If the item under discussion in contract negotiations is destroyed, then it is obviously impossible for an agreement to be submitted in response to an offer.

Acceptance of the contract can happen in several ways. The most fundamental is that the acceptance must be unequivocal. There can be no hesitation present in the acceptance of the terms laid out in the offer. If there is any objection to the terms laid out in the offer, then full acceptance has not occurred. Any changes proposed to a contract, as mentioned above, represent a counter-offer and an invalidation of the original offer. 

Communication of acceptance is not required in an unilateral contract. The acceptance of an unilateral contract occurs through action. Silence can almost never be considered a condition constituting acceptance of a contract. Even if the offeror tells the offeree “by silence you accept”, it is generally not considered legally binding. 

The only exceptions under which silence can be considered acceptance are if the offeree watches the performance of an action by an individual who would have a reasonable expectation of compensation for the action and does not stop the action. This is considered an acceptance by silence because they failed to reject the offer. If there is a history of contractual relations between the two parties if the offeree does not comment on a preferred contract, their silent acceptance may be inferred from past history. 

The offer may lay out the terms of acceptance, such as requiring that acceptance be faxed or mailed to the offeror. These are acceptable restrictions that can be placed on conditions of acceptance and are not considered to place an unreasonable burden upon the offeree.

Contract law has been construed historically that if ambiguous language is employed, then the contract will be interpreted in such a way as to give favor to the party that signed the contract, not the party that wrote the contract. Contracts law is derived from a common law heritage. 

Another major function of a contract is to document what each party to a contract is obligated to do for the other. Contract laws also serve to assign consequences in the event either party is unable to perform the duties taken up under the terms laid out in the original contract.

Contracts law is also meant to uphold the basic processes by which the economy functions in the United States and in all countries throughout the world, though not every country has a common law basis for understanding contract law.

Contract law in other systems may have a heritage derived from civil law, Islamic law, socialist law, and/or from tribal law. Depending on each country’s specific views of contracts, law systems in the country may assign more protection to the consumer or may afford more protection to the corporation.

The courts can become involved in enforcing contracts in the event there is a dispute between the parties in a contract. The courts may establish that a contract is enforceable, voidable, unenforceable, or void. The court may also rule that a quasi-contract is in effect. Enforceable contracts, voidable contracts, and unenforceable contracts are all considered examples of valid contracts.

When issuing a judgment, a court may declare a contract void or valid, and may declare the ruling to apply to the contract as a whole or to just a part of the contract. If only a portion is declared void, and the remainder of the contract can still be considered valid, the contract will remain in effect.

If the court rules that the contract is enforceable, it means that the two parties are bound by the terms of the contract to which they had previously agreed. An enforceable contract is a category of a valid contract. Enforceable contracts compel action on behalf of both parties.

A voidable contract is a specific category of enforceable contract. A voidable contract exists when one or both of the parties has the ability to release itself from the contract without a finding of fault. A voidable clause can be specifically inserted during the drafting of a contract by either party.

Any contract involving a minor is automatically considered a voidable contract. A minor may terminate the contract within two year of reaching the age of majority. In a voidable contract only the party with the right to void the contract may file suit for breach of contract.

An unenforceable is a valid contract which a legal body cannot compel one or both of the parties to fulfill the terms of because there is a statute or public policy with which the contract is in conflict.

A void contract is an oxymoron. A contract that is void is a contract which could not exist in the first place. A contract may be declared void by the courts in several circumstances. If one of the parties has been adjudicated to be incompetent, the contract may be declared void. A contract undertaken to commit an illegal act will be declared void as well.

Quasi-contracts are instances where two parties never specifically entered into a contract for the service in question, but a law creates an obligation for one party to provide compensation to another for services rendered.

In order to form a contract, five distinct aspects must be present. The first is that there must be consideration. The offer and acceptance of contracts is often referred to as an agreement.

Consideration in a contract does not apply if the contracted act is something legal prohibited. For instance, a contract cannot be entered into if the consideration of one of the parties is to kill another person, because the killing of another person is not normally a legal right.  

Contracts can only be enforced legally if the parties involved in them are believed to have wanted the courts to become involved in them at the time the contract was created. Two parties who claim they are entering a “gentleman’s agreement” are usually not considered to have entered into a contract.    

A contract cannot be considered to be valid unless both parties to the contract have the legal capacity to enter into the contract. Legal capacity has several elements. The first is that both parties must be of sufficient age to be considered above the age of majority. While a minor may become a party to a contract, they can disaffirm any contracts they enter into at any time. In the event a minor party to a contract disaffirms the contract, the minor must forfeit any goods they received. 

Recently, minors voiding contracts have been held responsible for returning the items covered in the contract in the same State they were granted, as are adults. Of course, the minor is only responsible for returning the consideration if it is currently in their possession.

The final requirement to creating a contract is that there must be a formality to inform both parties that the contract is in effect. The formality, however, is not standardized. It may involve affixing signatures to a written contract or shaking hands to formalize a verbal contract.

The law states that one who is a principal has a fiduciary duty owed to him by an agent. The agent receives this duty by being appointed by the principal. The purpose behind the appointment is for the agent to carry out special tasks on hand in which they are specialized. 

In return for a fee, the agent must perform his duties to the best of his ability in order to satisfy not only his principal, but also the guidelines of the law. The law that describes the ethical standards and duties of an agent towards his principal are located within the State laws as well as previous court opinions. 

Power of Attorney is granted through the consent of the principal given to the agent. The agent has the ability to be able to perform various duties which do not conflict with the interests of the principal since there is a fiduciary obligation. The agent must abide specifically to the terms set forth in the contract. 

One of the essential tenets of business contract law is that the terms of the contract must be one to which a When interpreting a contract there are several things that an arbiter or jury must examine. The first is to determine the intention of the parties to the contract. There are many ways to do so including the plain-meaning-rule.

When determining intent, the judgment must conform itself to the intent of the parties and must be alert to times when the parties’ intents deviate from the what would normally be expected. An interpretation must also seek to not reward fraudulent intentions which may have been held by a party to the contract.

Similar to a corporation, the members of a limited liability company (LLC) are not liable for the debts or damages the LLC may incur. Another plus is that the members of the limited liability company will never be personally liable for contract agreements through the LLC. 

A limited liability company receives the benefits of each form of business entity, while avoiding the disadvantages each one bears. The avoidance of double taxation and also not having to file taxes through the LLC are some of the key benefits of its kind. The creation of the LLC entity in recent times has made it convenient for individuals to be able to accumulate the benefits of each form of business entity, taking the pros and minus the cons.

When an individual receives the authority to act on behalf of another, they are known as principal agents. A contract is arranged in order to set up the guidelines on how the agent acts on behalf of the principal. 

A principal agent has a fiduciary duty towards the principal. A principal agent is not to perform any additional duties which may conflict with a prior obligation to which he or she has committed. When a principal agent relationship is created based on an arrangement of a contract, the power of attorney rights are automatically conveyed to the agent. 

The power of attorney held by the agent, is clearly specified within the contract on how to act on behalf of the principal. The power of attorney will automatically be revoked upon the death of the principal, or if he or she become mentally ill. 

The power of attorney is usually stated separately from the contract since it is to be shown to others that the agent has the right to act on behalf of his or her principal. Each agent within various industries is specialized, which is the benefit of why principals seek agents to perform their duties based on credentials and competence.