Contracts

Added: 08/24/09 

 

Contracts - Overview

Contracts are simply agreements or promises between one or more parties. People often enter into contracts without even realizing it. Contract law is the area of the law that deals how agreements are to be enforced. Business owners, such as dentists, need a comprehension of the basic concepts of contract law, but they should also be ready to seek the advice of a business attorney when conflicts over contracts reach the stage of legal action.

 

What is a Contract?

A contract is nothing more than an agreement that meets the legal requirements to be enforced. Provided that no affirmative defenses apply, the law will enforce a contract that comprises the following essential elements:

·                     Offer: one party offers something of value to another party.

·                     Acceptance: the offeree agrees to accept the offer.

·                     Consideration: the offeree gives something of value to the offeror.

 

Contracts can be made in a variety of ways. They can be written or simply oral. In most of the simpler contracts that we make in our daily lives, agreements and promises are implied by our conduct. For example, when you sit down at a restaurant and order food, you implicitly agree to pay for the food. Some contracts consist of each party promising something to other, called bilateral contracts. Others consist of an offer made by one party which is considered accepted when the offeree takes some kind of action, known as unilateral contracts.

 

Negotiating Tips

Dentists, whether as an employer or an employee, can learn a few essential strategies that have proven effective for successful contract negotiation. Here are a few such strategies:

 

·          Have your goals clear in mind before beginning negotiation. If you have several goals, making a checklist is helpful.

·          Do your homework. Always research the facts relevant to the subject matter of the contract.

·          Determine beforehand what you are and are not willing to compromise.

·          Establish rapport and trust to encourage open communication with the other party.

·          Prepare a first draft of what you suggest for the contract to bring to the negotiation.

·          Sincerely consider how you can help the other party achieve its most important goals.

 

Contract Drafting Tips

All dentists, whether as an employer or an employee, can and should learn some basic concepts regarding contract drafting in order to understand the importance and consequences of carefully chosen contract language. Below are a few pointers for contract drafting.

 

·          Write clearly and concisely, and identify the subjects of the contract in detail. Do not leave anything open to ambiguity.

·          For guidance, research sample agreements that are similar to the type of contract you are writing.

·          Be sure that all of the parties, locations, and property referenced in the contract are named accurately.

·          Choose words carefully, and stick with the same word choice throughout the contract.

·          If the contract is very long, include an outline or table of contents.

·          Include detailed definitions of important terms.

·          Include an agreement to litigate any potential disputes in the most favorable forum by selecting the venue, choice of law, who will pay litigation costs, and whether to allow traditional litigation or alternative dispute resolution.

·          Include the parties' business titles when signing.

·          Prevent accusations that pages or provisions were improperly added by numbering the pages and initialing any handwritten revisions.

·          Proofread, proofread, proofread. Have associates, employees, or attorneys review the draft before signing.

 

Contract Law

The law that determines how contracts can be enforced comes mainly from two different sources: the common law and statutory law. The common law is judge made law, and it forms the basis for the legal consequences of promises. Volumes of judicial opinions dating back to medieval England set precedents that courts follow on specific issues regarding contracts. Various statutes also dictate how certain contracts are treated. Most of the general statutory provisions relating to contracts are found in the Uniform Commercial Code (UCC). The UCC is a uniform act that has been enacted, in close to the same form, in every state of the United States, except Louisiana. In Texas, the code is called the Texas Business and Commerce Code.

 

Breach of Contract

After a legally enforceable contract has been created, the parties are legally required to perform their respective duties under the contract. The failure to perform a contractual obligation is called a breach of contract. The law distinguishes material breaches from immaterial breaches. Material breaches are those that deprive a party of an important or substantial part of the benefit due under the contract. Immaterial breaches are those that are technically contractual defaults but that do not prevent the other party from enjoying essentially what he bargained for. A breach of contract is what triggers a cause of action to enforce the contract. Various remedies are available in breach of contract suits, depending on what the injured party suffered as a result of the breach. They include:

·          Monetary damages in the amount of what the injured party would have received if the breach had not occurred

·          Specific performance-that is, a court order that the breaching party perform whatever action was promised

·          Cancellation and restitution to compensate for monetary loss or other damage suffered as a result of the breach

 

Summary

Dentists, whether as an employer or an employee, enter into contracts on a regular basis. Those who understand how to negotiate and draft contracts strategically are more likely to get what they want in business deals and to avoid disputes. Even businesspeople with ample experience with contracts are well advised to seek the advice of an attorney such as Boyd W. Shepherd, D.D.S., J.D., to assist in negotiating, drafting, or reviewing their dental employment as well as commercial lease contracts.