There was a time when Florida companies could do business with each other by communicating their assent to the terms and conditions of a transaction. These days, agreements and contracts are much more complicated, even where the actual laws governing them have not changed significantly over the years. Regardless, for business owners, contracts and agreements are both central to many organizational dealings. Therefore, it is critical to understand certain key differences, whether you are seeking to enforce or could be in breach. An experienced business litigation lawyer can tell you more about how Florida contracts law applies in your case, and some background information may be useful.
The terms “agreement” and “contract” are often interchangeable in common usage, but top law dictionaries offer two distinct definitions.
- An agreement exists where there is a mutual understanding regarding rights and responsibilities among parties to a business arrangement.
- A contract is an agreement between respective parties that creates legally binding obligations.
Based upon these definitions, a contract is a specific type of agreement, one which can be enforced in court if necessary. For Florida business owners seeking to ensure stability in company dealings, it is wise to enter into a contract that establishes proper accountability.
Requirements for a Legally Binding Contract
Florida law governing contracts requires certain elements for enforceability, which include:
- Essentials Regarding the Agreement: Every contract must incorporate an offer, acceptance of that offer by the other party, and mutual consent. There must also be something of value to be exchanged between the party, a legal concept known as “consideration.” Note that the exchange of consideration must have a legal purpose, so it is not possible to enforce a contract that runs contrary to law.
- Requirements Regarding the Parties: Parties must enter into a contract by their own free will and be legally competent to take such action. For example, a person under 18 years old does not have legal competence to contract. The element of free will refers to situations involving coercion or duress, which would make the contract unenforceable.
Situations Where a Written Contract is Necessary
According to Florida’s Statute of Frauds, certain contracts must be in writing to be enforceable, in addition to complying with the above legal requirements. Circumstances where a written document is necessary include:
- An agreement to accept the debt of another person;
- Contracts for the sale of real estate, whether related to improved or unimproved land;
- Leases for real estate that exceed one year;
- Agreements guaranteeing the results of a medical or surgical procedure;
- Subscriptions for newspaper or periodical service;
- Satisfaction of a debt for less than the total amount due; and,
- Other contracts as designated by law.
Turn to a Clearwater Business Lawyer for Advice
This overview of the difference between agreements and contracts is intended to be general. The details of the legal distinctions are far more complex, yet they have important implications for Florida businesses. If you have questions or would like more information, please call (727) 785-5100 to reach the business law attorneys at Clearwater Business Law. We serve clients throughout Pinellas and Hillsborough Counties, and we are happy to schedule a consultation to discuss your circumstances.