Why Contracts Are So Important

Michigan Contract Lawyer

“Get it in Writing”

By: Krissia J. Krohn

Many people have probably heard the phrase “get it in writing.” The basic concept of this old saying is that people talk, and more often than not, a hard copy document is easier to believe than a battle of “he said /she said.” One particular document that comes to mind with this phrase is a contract.

In order to assert a breach of contract claim a party must show there a was in fact a contract, the other party breached that contract, and as a result of the breach the nonbreaching party suffered damages. These three factors must be proven by a preponderance of evidence, which means the evidence, when weighed against the opposing side, is more convincing and has the greater probability of truth.

Since one of the factors of a breach of contract claim is to show that there was a contract, having one in writing may help when proving over trying to prove an oral contract. Cue that old saying. But just because a contract is in writing, is it valid?

In order to have a valid contract there are five requirements that must be met: (1) the parties must be competent to contract, meaning they must have the mental capacity to contract; (2) there must be a proper subject matter that expresses the proper material facts; (3) there has to be legal consideration; (4) there must be mutuality of the agreement; and (5) there must be mutuality of obligation.  In essence, each party to the agreement is generally required to provide value of some kind to the other in order to meet the consideration and mutuality obligations in the contract.

The elements listed above reflect the fact that in order to have a valid contract, the parties involved must have a meeting of the minds on all the essential terms of the contract. This is judged by an objective standard, looking at the express written words of the parties and their visible acts. It is not judged by the parties’ subjective state of minds. If a mutual meeting of minds does not exist, a contract does not exist.

In the event that one party believes the other has failed to abide by the terms of the contract, or has breached it, the non-breaching party may sue for damages. The statute of limitations only allows six (6) years to bring most actions to recover damages or money due for a breach of contract.  In certain cases, the statute may be modified to fewer than six years by contract, or by statute as well, so make certain to contact counsel to advise you with regard to what claims may be brought and when.

Andrew D. Concannon and John E. Gannon practice in the areas of business and corporate law, civil litigation, labor and employment law, real estate law, and wrongful termination at SMITH BOVILL, P.C. These articles are intended to introduce various issues arising within this field of practice and are not intended to replace individual legal advice. If you have questions, please contact Andrew or John at the firm’s Saginaw office.