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Ensure Your Business Has Legally Enforceable Contracts

Apr 20, 2020

In the simplest terms, consideration can be seen as value. Under California contract law, mutual consideration (which is the exchange of value) is an essential element in the formation of any legally binding contract. Without it, a California court will most likely deem a contract unenforceable.

For example, consideration is lacking if two parties enter a contract where one party is legally required to provide services, and the other party is not required to do or pay anything in exchange. The bottom line is that the law discredits one-sided deals. The reasoning behind it: why would a person enter a contract if they have nothing to gain from it? Talk to a San Jose contract attorney to learn more about what your business is missing.

Business Contracts

There are generally two types of contracts—the unilateral contract and the bilateral contract. In both, there is an exchange of value. Most people regularly enter bilateral contracts. Paying for groceries or mechanical repairs, mobile phone agreements, and utility service agreements are all considered forms of bilateral contracts.

With unilateral contracts, only one party makes a promise. The most common example is a reward contract. For instance, one party offers a reward for the return of a lost cat. Nobody is obligated to find, look for, or even return the lost cat under the contract. Still, the reward offeror is legally bound to pay the reward if the cat is returned. Has your contract been breached? Learn more about how to defend yourself and about the different general breaches of contracts.

An Exchange Of Value

Consideration can take many forms. These can include cash, services, and property. Consideration can also be a promise to do or to refrain from doing something that a party can otherwise legally do. The promise has been given value. If party A promises to cut the grass on party B’s lawn the following summer in exchange for party B’s advanced payment, there is a sufficient exchange of value. Similarly, if party A promises not to take party B to court if party B pays reimbursement for some claimed harm, the promise not to sue can also be considered adequate consideration.
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A Reasonable Exchange Of Value

Consideration must be “adequate.” The exchange in value doesn’t have to be exact, but there should be a reasonable exchange of value between two or more parties. The market value determines the value of consideration for a good or service. While parties are free to negotiate amongst themselves, paying one dollar for a new car worth $50,000.00 (absent any other value exchanged) would clearly be inadequate. The one dollar is essentially pretend consideration, also considered nominal consideration, which courts will quickly see through.

Bad negotiation will not always result in a contract being deemed unenforceable. Parties are free to make any bad deals so long as the consideration is at least somewhat reasonable. Generally, courts analyze exchanges of value on a case by case basis. Learn more about negotiations and business disputes here.

Nick Heimlich Law Can Help

Consideration in contracts can create useful options for businesses. For instance, you can think of an option contract as a legally binding agreement to keep an offer open and accessible for a certain amount of time in exchange for something of value—which usually is money.

The consideration element of legally binding contracts can be as straightforward as an exchange of money for goods, or it can become obscure when it comes to complex, long-term contracts with multiple amendments. Heimlich Law can help ensure your business has legally enforceable contracts in place and make sure you know the key differences between state and federal courts to be prepared.

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Contact us today, or call 408-457-9364 for immediate help and guidance.
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I recently received legal advice from Nick and he was very professional and easy to talk to. He gave us great advice and I would definitely use him again if needed. Thank you Nick!
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Nick was excellent! Very knowledgeable, asks great questions, and quickly understood the situation and was able to give great advice. I so appreciated his time, insight, and expertise in assisting with our situation. Highly recommend!
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Nick Heimlich was very professional and knowledgeable in my case. He left a lot of the worrisome I had in my case to the expert and was very good at what he does. I will recommend Nick to anyone who needs council!Much appreciative,Mario
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This was the first time ever needing a lawyer for something, I was a bit frantic and overwhelmed with everything going on, but Nick and his team were very professional and honest, and made me feel at ease about my case. They were even professional and cool with the opposing attorney even though she was being unprofessional at times. In the end, they were able to settle my case and bring me a satisfying outcome. If you're ever in a bind and need a business lawyer, I highly recommend Nick and his team.
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I am an officer at a company that provides B2B Demand Generation services to marketing and sales. Over a number of years, I've worked with Nick Heimlich for legal services. He has advised me well and helped to represent the company in multiple legal disputes including in Court. I am very satisfied with his work and highly recommend him.
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I needed some legal consultation and per recommendation I received, I have approached Nicholas. He got back to me quickly and provided great service, he was patient, professional and knowledgeable. His advise is much appreciated, it cleared the situation, draw the next steps to follow and placed my mind to peace .I would definitely recommend his service.
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Mr Heimlich was very professional kind and knowledgeable when I give him a call. I was calling to hire an attorney for an tenant and landlord dispute. I had a particular issue that Mr Heimlich took time to completely listen to me. unfortunately the area I needed help was not an area that Mr Nick practiced. but he was not hesitant to give me some leads and direct me to the right place. he's a man of character and cares about what he does, I can only imagine his level of excellence in his area of expertise. he's a man of great character and I would recommend him for anyone to give him a call and talk to him. thank you very much Nick. thank you for caring .
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I entered into a membership contract that had unreasonable cancellation requirements. I went to Nick through my company’s employee assistance program. Nick did thorough research and found that the contract term exceeded term limits allowed by California law. As a result, I was able to cancel the contract without any penalty. I was very satisfied with the outcome.
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