Owning and operating a business will involve a variety of agreements with other parties. When these agreements take the form of contracts, they will be legally binding, and both parties will be required to meet certain obligations or face consequences. By understanding what makes a contract a legal agreement and the elements that should be included in a contract, business owners can make sure they understand their obligations and have the protections they need.

Legal Elements of a Contract

For a contract to be valid and legally binding, it must function as an agreement in which one party makes an offer, and another party accepts that offer. This may be a straightforward offer, such as stating that goods or services will be provided at a certain price, or a contract may involve a more complex offer in which both parties will have obligations. After an offer is made, the other party may agree to the offer, or they may make a counteroffer. The parties may negotiate to finalize the details of each party’s obligations.

A contract must also include consideration or something of value that is exchanged between the parties. Consideration will often involve a monetary payment made by one party in exchange for goods or services provided by the other party. However, it may also involve other types of actions, such as the right by one party to use the other party’s intellectual property in exchange for performing services. 

Contractual issues are one of the most common reasons why a company may pursue business litigation. Entering into a legal contract with another party will put protections in place, and both parties will be required to fulfill the terms of their agreement. However, there are many situations where one party may violate a contract’s terms, and they may do so out of negligence, such as by performing substandard work; because of circumstances beyond their control; or in an intentional attempt to cause the other party to suffer financial harm. Different types of contract breaches may be approached differently, and business owners will need to understand how the laws will address these types of breaches during litigation.

Minor Breach Vs. Material Breach

The way a contract dispute will be approached will usually depend on the seriousness of the alleged breach. In a minor breach of contract, a party may partially fulfill some of the contract’s terms while failing to fully meet their obligations. For example, a purchase contract may state that goods will be delivered by a certain date, but the vendor may only be able to deliver 90 percent of what was ordered by that date. In these cases, the parties may be able to reach an agreement on how to resolve these issues, such as by offering a discount on the 10 percent of the goods that were not delivered on time.

Successful businesses often spend years, if not decades, figuring out the most effective business strategies, establishing vendor and client relationships, and creating profitable products and services. Understandably, businesses want to protect this valuable information from falling into the wrong hands. Non-disclosure agreements, or confidentiality agreements, are an important legal tool for protecting trade secrets, intellectual property, and other proprietary information. Unfortunately, non-disclosure agreement violations can happen, and confidential information may be leaked to other parties.

Violation of a Florida Non-Disclosure Agreement

Non-disclosure agreements can be valuable legal instruments for businesses that want to protect confidential information. Unfortunately, including a non-disclosure agreement in an employment contract does not always prevent violations of the agreement.

Employee breaches of contract may involve:

For many employers, non-compete agreements provide essential protections. These agreements ensure that employees who have gained a knowledge and understanding of a company’s business practices and trade secrets cannot use this information to engage in unfair competition by working for a competitor or starting their own competing business. In some cases, a business may need to pursue litigation to enforce non-compete agreements and address violations that have resulted in financial losses or other issues that have affected a company’s ability to operate successfully. However, the ability to do so may change in the future as new laws and regulations are implemented that affect non-compete agreements.

Potential Limitations on Non-Compete Agreements

Some advocates believe that non-compete agreements place unfair restrictions on workers, limiting their ability to change jobs, pursue opportunities, and increase their income. To address this issue, multiple states have passed laws restricting non-compete agreements in certain situations, such as for employees under a certain income level. For employers in Florida, non-compete agreements are generally enforceable as long as their restrictions are reasonable and they are necessary to protect a company’s legitimate business interests.

The free market is based on healthy competition, and businesses can succeed by competing with each other to provide quality goods and services to consumers at the best prices. However, there are many cases where companies may attempt to unfairly influence the market and increase their profits by discouraging or eliminating competition. If a company has suffered harm because of another company’s anti-competitive practices, it may be able to pursue business litigation to address this issue.

Antitrust Lawsuits

Cases that address unfair practices meant to reduce competition are known as antitrust cases, and they may be filed in response to issues such as: