On television and in the movies, we see business being conducted with a handshake agreement, but that’s not the way it really should work in the business world.
Instead, we have contracts, which are legally enforceable agreements between parties. You don’t have to sign on the dotted line of a piece of paper that says CONTRACT at the top for it to be enforceable. In fact, a purchase order or a bill of sale are contracts. You agreed to buy something; the purchase order is the agreement to pay.
That written agreement is your proof that two parties have entered into a business transaction. When you sign that purchase order to buy 10 cases of paper for the printers in your office, that constitutes a contract.
Paper isn’t a huge purchase. But what if you buy a copy machine that costs a few thousand dollars? Or an even bigger piece of machinery to handle commercial printing? You definitely will want an official contract that spells out terms of the purchase, financing, a warranty and such. In most cases in your business, you’ll want a written, executed contract between two parties to make sure no one changes the terms down the road or has a different memory of the agreement.
California has laws that govern contracts for everything from the sale of goods to property to employment agreements to leases. A contract is said to be breached when one of the parties fails to fulfill their end of the bargain. When that happens, the other party can go to court to try to resolve the issue or bring in a mediator.
This is just a short overview of contracts but enough to remind all business owners of the importance of putting transaction agreements in writing. An attorney who works with business law can draft contracts or review contracts before you sign them to make sure your business is protected.