FAQs – Commercial Contracts

FAQs – Commercial Contracts

  • I conduct many business transactions. When is it okay to have an oral agreement and when do I need a signed document?

    Oral agreements are rarely, if ever, the recommended approach because of the likelihood of confusion and misunderstanding. In fact, in the sale of goods, oral contracts are generally unenforceable in Illinois when the sales exceed $500 (with certain exceptions). Rather than an oral contract, a short written contract that contains all of the key elements of the transaction will almost always be preferred. A written contract protects both parties to the contract and clearly outlines expectations and duties.

  • Why do I need an attorney to review a business contract before I sign?

    There are a number of advantages to having an attorney involved in the contract process. For example, your attorney will ensure that your objectives are met and that there is no confusion with the contract. Your attorney will also help you fully understand the risks and liabilities that may arise under the contract, preventing many issues further down the road. He or she will also explain any legal concepts or terms which you are unfamiliar with. For example, some contracts contain a “merger clause”, which generally means that all prior written and oral communications have been merged into the contract.

  • When the other party presents a standard contract, why do I need an attorney to review it?

    In almost all cases, the other party’s standard or pre-printed form has been designed to specifically protect their interests, and therefore, may be one-sided. You need an attorney to represent and protect your interests. For example, some pre-printed forms may contain “evergreen clauses”, which means that the contract renews itself automatically and may require a significant payment to terminate it early.

  • What should I do if I am accused of a breach of contract?

    If you are accused of a breach of contract, you should immediately contact your attorney. Your attorney will then help you review the facts and circumstances to determine if the breach actually occurred, and on whose part. Occasionally, you will have a valid legal excuse for your failure to meet terms, which means there was no breach. In other cases, you have the right to remedy any breach within a certain grace period. It’s even possible that you were not in fact in breach, but rather the other party was.

  • What should I do if I think that the other party has breached the contract?

    Most contracts have a period of time in which you must report any breach to the other party. By contacting your attorney immediately, you can ensure that you meet those notification requirements. If you fail to notify the other party within that time limit, you may lose the ability to declare that breach, and in some cases, future breaches as well.

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