A contract is basically an agreement between two parties creating a legal obligation for both of them to perform specific acts. Each party is legally bound to perform the specified duties such as rendering a payment or delivering goods. A contract may be used for various transactions, including the sale of land or goods, or the provision of services. They may be either oral or written, though courts prefer that agreements be put in writing. You will feel most confident about signing a contract when you or a lawyer has drafted it on your behalf and you are already familiar with its terms and language.
What Does Your Signature Mean?
Essentially, your signature means that you have read the document, agree to its terms and conditions, intend to enter into the agreement, and are legally authorized and mentally competent to do so. Therefore, it’s wise to make sure that you understand all the terms stated in the contract and that every “blank” in the document is filled. And, of course, it is imperative that you get the other party’s signature and a copy of the executed contract with both signatures. (Signing a contract online means that both parties can have legal copies without the hassle of shipping, copying or faxing.)
In a compensation agreement, the parties state the amount of money that will be paid to the other party as compensation for the performance of some action. Given that the compensation agreement is tailored to address a monetary exchange, these agreements usually include a detailed payment schedule, as well as the manner in which the payments will be made. It is important to note that compensation agreements may be used between firms or between a firm and an individual. This type of contract may even address things such as potential overtime, bonuses, or other financial incentives for good work.
A supplemental agreement is generally used to supplement some other contract already in existence. It is normally a secondary agreement used to augment a primary agreement. In some situations, it may make sense for parties to use an amendment, or an addendum, to make changes to a contract. However, a supplemental agreement is often used to elaborate on a particular aspect of the document, without making any actual changes to the original agreement.
If parties to a contract sign a non-disclosure and confidentiality agreement, it may be necessary to create a supplemental agreement down the road to clarify the information that is subject to the non-disclosure rules. This would not be changing the initial agreement, but rather expanding on the intended meaning of the original contract. Thus, it is evident that supplemental agreements can be quite useful to ensure adequate understanding of a particular portion of a contract.
Businesses that offer somewhat dangerous activities to the public (mixed martial arts, skiing, para-sailing, amusement park rides) require that the members of the public sign an indemnity agreement releasing the business from liability in case of an accident. In reality, if the business is found to be negligent (faulty equipment, poor maintenance), the individual who was injured still has a claim against the company. An indemnity agreement (sometimes called a “hold harmless agreement”) can be a contract or a section of a contract. In these cases, an indemnity agreement is contract language that indemnifies (holds harmless) one of the parties in a contract for specific actions that might cause damage to the other party.
When Not to Sign a Contract
There are several instances when it is advisable not to sign a contract. (1) It’s often in your best interest that you do not sign an agreement that still has unfilled blanks, whether for a date, an item, or a dollar amount. (2) If you feel threatened, or under duress. (3) If you feel like you don’t understand something and want to review it with a lawyer.
Learn more about how The Law Offices of Cesar A. Montalvo can help you with creating contracts and resolving contract issues for your business.