It's 2024, and with so many options on the table, you've probably reached the point where:
Without wasting your time, our guide teaches you just that: how to know when a contract is legally binding, as well as when it isn’t.
Let’s get going!
A. Definition of a Binding Contract 2
1. What is a “Binding” Contract? 2
2. What is a “Non-Binding” Contract 2
B. Elements of a Binding Contract 2
C. Make a Legally Binding Contract (Online) 3
Step 1: Choose Your Document Type 3
Step 2: Answer a Few Simple Questions 4
Step 3: Watch Your Contract Build Instantly 4
Step 4: Review and Finalize the Document 4
Step 5: Save and Store in Your Dashboard CMS 4
Step 6: Get Advanced AI Assistance for Contract Reviews 4
Step 7: Build and Try for Free 4
1. How soon after signing a contract is it legally binding? 5
2. What are the 4 elements of a legally binding contract? 5
3. How do I know if a contract is legally binding? 5
Answer: A "binding" contract is an agreement between two or more parties that is legally enforceable. It means each party has agreed to certain terms and conditions, and if they don’t follow through, they could face legal consequences.
For a contract to be binding, it needs an offer, acceptance, and consideration (something of value exchanged between the parties).
Answer: A “non-binding” contract is an agreement that outlines the terms and intentions of a deal but is not legally enforceable. It means that even if one party doesn’t follow through with what’s stated, they won’t face legal consequences.
Non-binding contracts are often used for preliminary discussions, letters of intent, or agreements to negotiate in good faith.
A valid contract ensures that all parties are clear on their obligations and can protect their rights if there’s a dispute.
So, this is our breakdown of the 6 elements of a legally binding document.
An offer is the first step in forming a contract. It’s a clear proposal by one party (the offeror) to another (the offeree) to enter into an agreement on certain terms.
Example: “I will sell you my car for $5,000” → The offer must be definite, specific, and communicated to the other party.
Acceptance is the offeree’s agreement to the terms of the offer. It must be clear, unconditional, and communicated back to the offeror.
Example: “I agree to buy your car for $5,000” → Any changes to the offer would be considered a counteroffer, not acceptance.
Consideration is something of value that each party gives or promises to give in exchange for what they receive.
Example: Money, services, goods, or a promise to act/refrain from acting.
Without consideration, the agreement is a gift, not a contract.
Both parties must have a mutual intention to enter into a legally binding relationship. This is often called the “meeting of the minds.”
Example: Both parties should understand that they are entering into a binding agreement, not a casual arrangement.
Each party must have the legal capacity to enter into a contract. This means they must be of sound mind, not under the influence, and of legal age.
Example: Minors or individuals with mental impairments typically lack capacity to be legally bound.
The purpose of the contract must be legal and not violate any laws or public policies.
Example: A contract to sell illegal items would not be enforceable because its purpose is unlawful.
With goHeather.io, you can save time and create contracts confidently—without needing to be a legal expert. Give it a try and see how it can streamline your contract creation process!
Join us to see how simple it is!
Decide which type of legal document you need: employment contract, contractor agreement, or any other HR document. goHeather offers a range of lawyer-made templates tailored to different provinces in Canada.
Examples:
goHeather’s AI will guide you through a series of questions related to your business and employment needs.
Why? Because this helps the AI understand what you’re looking for, as well as that the contract is customized to your specific situation.
Tip: The more precise your answers, the better tailored your document will be.
As you fill out the form, goHeather will build your document in real-time. You can see it take shape and ensure all the necessary clauses are included before finalizing.
Options: Choose from multi-option clauses for termination, bonus structures, restrictive covenants, and more.
Review the generated document for any adjustments you might want to make. You can make changes up to five times for free, in case you need to tweak the wording or add additional details.
Security: goHeather’s templates are written by local lawyers, ensuring that your contracts are up to date and compliant with local laws.
Once finalized, save your document as a PDF and store it in the goHeather Dashboard CMS. This feature makes it easy to manage, access, and track your legal documents whenever needed.
Bonus: Your Dashboard lets you keep an organized record of employee contracts and other HR documents.
Answer: Instantly.
As soon as each party has signed the contract, it becomes legally binding – nobody can deny that after signing.
Answer: The four elements of a legally binding contract are offer, acceptance, consideration, and intention to create a legal relationship.
Each party must agree to the terms, provide something of value, and intend for the agreement to be legally enforceable.
Answer: Ensure it contains the essential elements: an offer, acceptance, consideration, and mutual intent to create a legal relationship.
Additionally, check that all parties have the legal capacity to enter into the contract and that the agreement’s purpose is lawful.
Jeff is a lawyer in Toronto and he is a co-founder of goHeather. Jeff is a frequent lecturer on commercial and employment law and AI for law firms, and is the author of a commercial law textbook and various trade journal articles. Jeff is interested in business, technology and law.
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