Legal Issues in Contract: What You Need to Know

Contracts are an essential part of any business, whether you are a small startup or a large corporation. They are legally binding agreements that outline the terms and conditions of a business relationship between two parties. As such, it is essential to ensure that the contracts you enter into are legally valid and enforceable.

Here are some legal issues to keep in mind when creating or entering into a contract:

1. Offer and Acceptance

For a contract to be legally binding, there needs to be a clear offer made by one party that is then accepted by the other party. The offer needs to be specific and include all relevant terms and conditions.

The acceptance of the offer also needs to be clear. It cannot be assumed that silence or inaction means acceptance. If there is any ambiguity around the offer or acceptance, it can lead to legal disputes down the line.

2. Consideration

Consideration refers to something of value that is exchanged between the parties as part of the contract. This can include goods, services, or money. Consideration is essential for a contract to be legally binding.

It is important to ensure that the consideration being exchanged is fair and reasonable. If one party receives significantly more than the other, it can lead to legal challenges.

3. Capacity

Both parties entering into a contract must have the capacity to do so. This means they must be of legal age, mentally capable, and not under any undue influence. If one party lacks capacity, the contract may not be legally valid.

4. Legality

The contract must be legal in nature. Any illegal activities or provisions cannot be included in the contract. If there are illegal provisions, the entire contract may be unenforceable.

5. Misrepresentation and Fraud

If one party intentionally misrepresents or conceals information about the contract, it can lead to legal challenges. Fraudulent behavior can also lead to a contract being declared void.

6. Breach of Contract

If one party fails to fulfill their obligations under the contract, it is considered a breach of contract. This can lead to legal action and damages being sought by the other party.

It is important to ensure that the contract includes clear provisions outlining what constitutes a breach and what the consequences will be.


Contracts are essential for any business relationship, but it is crucial to ensure that they are legally valid and enforceable. By keeping these legal issues in mind and working with legal professionals, you can create contracts that protect your business and minimize the risk of legal disputes.