What is a commercial contract?

A commercial contract can be defined as a legally binding agreement between two or more parties that involves the exchange of goods, services, or money for business purposes. These contracts are governed by contract law, which is a branch of common law in the legal system of England and Wales.

Key features of commercial contracts in England and Wales include:

• Offer and acceptance: A valid contract requires an offer by one party and an acceptance of that offer by another. Both parties must have a clear understanding of the terms and conditions.
• Intention to create legal relations: For a contract to be legally enforceable, there must be an intention on the part of the parties to create legal relations. This means that the parties must intend for the agreement to be binding and enforceable by law.
• Consideration: Consideration is something of value exchanged between the parties, such as money, goods, or services. Each party must provide something of value for the contract to be valid.
• Legal capacity: The parties entering into the contract must have the legal capacity to do so. This typically means that they must be of a sound mind and not under the influence of drugs or alcohol.
• Legal formalities: Whilst some contracts can be oral, certain types of contracts, especially those dealing with property or goods, may be required to be in writing to deem them enforceable.
• Terms and conditions: The contract should clearly outline the rights and obligations of each party. It may cover matters such as payment terms, delivery schedules, warranties, and dispute resolution mechanisms.
• Enforceability: A commercial contract is enforceable through the legal system. If one party fails to fulfil their obligations, the other party can seek legal remedies, such as damages or specific performance.

It’s essential for parties entering into commercial contracts to carefully review and understand the terms before signing. Many businesses seek legal advice when drafting or entering into significant contracts to ensure that their interests are protected and that the contract complies with relevant laws and regulations.

Should you seek legal advice when entering into a contract?

It is generally advisable that parties seek legal advice from commercial contract solicitors before entering into an agreement.

Whilst not all contracts may require legal assistance, obtaining professional, commercial advice can help you understand the terms, potential risks, and legal implications associated with the agreement. Listed below are some reasons why seeking legal advice is often recommended:

• Understanding legal terms: Contracts often contain legal terminology that may be complex or unfamiliar to individuals without legal training. Contract lawyers can help you interpret and understand the terms and conditions of the contract.
• Risk assessment: Legal professionals can assess the potential risks and liabilities associated with the contract. They can identify areas where you may be exposed to legal issues and suggest ways to mitigate those risks.
• Compliance with laws and regulations: Laws and regulations may vary depending on the industry and the nature of the contract. A commercial contract lawyer can ensure that the contract complies with relevant legal requirements and standards.
• Negotiation assistance: If there are terms in the contract that you would like to negotiate or modify, a lawyer can provide guidance on the negotiation process and help you achieve more favourable terms.
• Customisation of Terms: Legal professionals can tailor the contract to better suit your specific needs and circumstances. This can help ensure that the agreement reflects your intentions and protects your interests.
• Dispute resolution planning: In the unfortunate event of a dispute, a well-drafted contract can serve as a valuable resource. Commercial contract lawyers can help include provisions for dispute resolution mechanisms, such as arbitration or mediation. This can help to minimise the potential for time-consuming litigation in a cost effective manner.
• Legal enforceability: Lawyers can advise on the legal enforceability of the contract and its terms. Ensuring that the contract is properly drafted and adheres to legal requirements increases the likelihood that it will be upheld in a court of law.

Although legal advice can involve some upfront costs, it is often a wise investment to prevent potential legal complications and disputes in the future.

ARC Costs have a network of commercial law solicitors who can assist and advise on a range of commercial contracts and agreements. Our network can assist whether you require a professional to draft the contract, or to advise upon a commercial agreement. They provide assistance on a wide range of commercial contracts including:

• Contracts for the purchase of goods
• Agency distribution agreements
• Consultancy contracts
• Outsourcing agreements
• Joint venture agreements
•  Confidentiality and non-disclosure agreements
• Intellectual property and software agreements
• Domestic and international long term supply chain agreements

Commercial contract solicitors and contract disputes

Commercial contract solicitors may be required to help resolve a contract dispute. A contract dispute may arise when there is a disagreement or conflict between parties who are bound by the terms of a contract.

These types of disputes can arise for many reasons, including differing interpretations of contract terms, allegations of breach of contract, or failure to perform contractual obligations.

Contract disputes can involve individuals, businesses, or other entities that have entered into a contractual relationship.

The key elements of a contract dispute may include:

• Breach of contract: A common cause of contract disputes is a breach of contract, where one party fails to fulfil its contractual obligations. This could involve a failure to deliver goods or services, non-payment, or any other violation of the agreed-upon terms.
• Interpretation of terms: Disputes may arise due to disagreements over the interpretation of specific terms or clauses within the contract. Ambiguous language or poorly defined terms can contribute to these types of disagreements.
• Performance issues: Disputes may arise if one party believes that the other has not adequately performed its obligations under the contract. This could include claims of substandard work, delays, or incomplete performance.
• Misrepresentation or fraud: If one party believes that the other party made false statements or engaged in fraudulent conduct during the contract negotiation process, it may lead to a dispute.
• Termination of the contract: Disputes can also arise when one party seeks to terminate the contract prematurely, and the other party disagrees with the grounds for termination or challenges the validity of the termination.
• Payment disputes: Issues related to payment, such as disagreements over the amount, timing, or method of payment, can lead to contract disputes.

Resolving a contract dispute

Commercial contract solicitors can be vital in the resolution of a dispute. Resolution of contract disputes typically involves one or more of the following:

• Negotiation: The parties may attempt to resolve the dispute through negotiations, often involving discussions and compromise to reach a mutually acceptable resolution.
• Mediation: A neutral third party (mediator) facilitates discussions between the parties to help them reach a resolution. Mediation is non-binding, and the parties retain control over the outcome.
• Arbitration: Similar to mediation, but in arbitration, a neutral arbitrator makes a binding decision after hearing arguments and evidence from both parties.
• Litigation: If other methods fail, the parties may resort to filing a lawsuit in court. The court will then make a binding decision after a trial.

Efforts to resolve contract disputes are often guided by the dispute resolution mechanisms outlined in the contract itself. It’s crucial for parties to carefully review their contracts and follow any specified procedures for resolving disputes. Seeking legal advice early in the dispute resolution process is also advisable to understand rights, obligations, and potential legal remedies

How can ARC Costs assist?

As well as advising and assisting on the legal costs involved with contract disputes, ARC Costs can also introduce you to an experienced commercial contract solicitor who is equipped to take legal action in your best interests.

Our network of specialist commercial law firms are extremely knowledgeable and will provide you with the most appropriate legal advice. Please note, however, that our panel are unfortunately unable to assist with employment law contracts.

In addition to introducing you to a commercial contract solicitor, we can also assist in the recovery and negotiation of legal costs in commercial cases, whether you are the paying or receiving party.

ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist you with your commercial litigation costs issues.

To find out more about how we can provide you with assistance, please get in touch with us at 012014 397302 or email one of our expert team at info@arccosts.co.uk. Alternatively, please use our free chat facility to speak to an expert directly.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.