No matter the type of business you own, contracts will likely be the most common type of legal transaction you will handle. A contract represents a legally enforceable agreement between you and another party. Understanding the various types of contracts and the laws that governs them is crucial in running a successful business.
A contract can be between people or companies, and may include agreements regarding services or goods. However, depending on what the contract is regarding, one of two contract laws may govern it. For most contracts, the common law governs over it. The common law is a traditional set of laws that govern over contracts regarding general business transactions, leases, and employment agreements.
While the common law generally governs over contracts regarding services, the uniform commercial code governs over contracts regarding goods. Unlike the common law, which is a traditional set of laws, the Uniform Commercial Code is more of a standard collection of guidelines. These guidelines are used to enforce the law of commercial goods.
While the common law has historically been based on the decisions of judges and courts over the years, it is pretty much universal. The Uniform Commercial Code, however, has been utilized in part by most states. The essential elements necessary for a contract do not change regardless of whether the contract is over goods or services.
Although the necessary elements are relatively similar between contracts, every agreement is different. In order for business owners to run a successful business, knowledge of the various types of contracts in the laws that govern them is crucial, and may take the help of an attorney.