Our corporate lawyers in Charleston regularly review, draft and develop a range of business contracts for entrepreneurs, professionals, startups and businesses throughout South Carolina. Examples of business contracts that our law firm handles include, but are not limited to:
- many other business contracts.
In general, a business contract will involve an exchange of promises set forth in a written agreement. If the business contract contains the following elements it will be binding on the parties and enforceable under law. An enforceable business contract in connection with a business transaction will generally include the following elements:
- Offer – one party’s promise in exchange for performance by another party;
- Acceptance – one party’s agreement to be bound by the terms of the offer;
- Consideration – a benefit (generally money) which must be bargained for between the parties and is an essential reason for a party to enter into the contract ;
- Intention to Be Legally Bound;
- Legal Purpose – the contract must be for a legal purpose;
- Capacity – legal competence of a party to enter into a valid contract (e.g., age, mental capacity, and legal existence);
- Mutual Assent – a mutual meeting of the minds or understanding between both parties; and
- Certainty of Terms – the terms of the contract must be precise and definite.
Framework of the a Business Contract
Every business contract in South Carolina should (i) be in writing (although oral contracts are enforceable in certain circumstances) and (ii) accurately detail the substantive terms of the contract.
The title should appear in bold capital letters at the top of the first page in all capital letters. The business contract title should accurately describe the substance of the underlying business contract (e.g., asset purchase agreement, stock purchase agreement, operating agreement, employment agreement, consulting agreement, independent contractor agreement, mutual nondisclosure agreement, etc.). The title page should also in some situation also identify the parties to the business contract and the date of execution.
Table of Contents
A table of contents should be reserved for those business contracts that are more than fifteen pages. A table of contents will allow the reader to quickly locate the important provisions of the business contract. Moreover, a table of contents will provide the reader with an introduction to what is included within the four corners of the contract.
The introductory clause identifies a number of crucial pieces of information. The introductory clause should identify the parties, whether the party is an individual or a business entity, the location of the individual or the state and form of business entity, whether the business entity is a partnership, limited liability company or corporation, the nature of their relationship, and the date of the agreement. For example:
This Stock Purchase Agreement (the “Agreement”) is made and entered into as of November 1, 2018, by and between XYZ, LLC, a South Carolina limited liability company, with its principal place of business at 164 Market Street, Charleston, South Carolina 29401 (the “Seller”), and Jane Doe, and individual, residing at 501 Belle Hall Parkway, Mt. Pleasant, South Carolina 29464 (the “Purchaser”).
Note, failure to properly identify the parties could affect the enforceability of the underlying contract. Moreover, particular attention should be given as to whether the business contract will be effective when executed or if a future contingent date is appropriate. Caution should be used when back-dating business contracts and can, in some instances, result in civil or criminal liability.
Recitals in business contracts are offered to describe the fundamental purpose of the agreement and any important background information. The recitals should not include the substantive promises and mutual exchanges of the agreement. Although generally not considered binding terms of the business contract, recital may be offered as binding terms. For example:
The parties acknowledge and agree that the recitals set forth above are true and correct in all material respects and are incorporate herein and made part of this Agreement as if fully set forth herein.
A recital of consideration is also an important element of the business contract. A recital of consideration is provided to signal the end of the recitals and the beginning of the body of the agreement. For example:
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth herein, together with other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties agree as follows:
The body of a business contract sets forth the substantive terms of the Agreement, including the parties respective rights, duties and obligations. The body of the business contract is structure with the most important provisions of the agreement appearing first and the boilerplate provisions appearing last. For example, an asset purchase agreement may provide a description of the property being sold, the purchase price and payment terms, representations and warranties, terms of closing, including any conditions to closing and closing deliverables, post-closing covenants and obligations, including indemnification obligations, and miscellaneous terms.
Contract Schedules and Exhibits
Schedules and Exhibits incorporated into a business contract follow the signature page. In brief, schedules are used to denote information that is supplemental to the body of the agreement. The most common example is disclosure schedules in purchase agreements, which are used to identify exceptions and qualifications to a party’s representations and warranties. Exhibits are stand-alone ancillary agreements to be entered into in connection with the agreement. For example, in purchase agreements, the exhibits would likely include a trademark assignment, business contract assignment, commercial lease assignment, bill of sale, noncompete agreement, consulting agreement, etc.
In addition, there are numerous boilerplate contract clauses set forth in every business agreement that are equally important.
Governing Law and Venue
Jurisdiction where a suit must be filed is very important in all business contracts. A governing law or choice of law provision specifies South Carolina (or another state) as the agreed upon jurisdiction that will govern the enforcement of the business contract and the interpretation of its terms. A venue, or forum selection, clause determines the actual place where the litigation will be held.
Alternative Dispute Resolution
An alternative dispute resolution provision allows the parties to specify a method to resolve any contract disputes outside of the formal commercial litigation process, such as good-faith negotiation between the parties, mediation, arbitration, or a combination of the aforementioned. All business contracts in South Carolina that provide for arbitration to resolve disputes are required to place the following notice above the title of the business contract on the first page. For example:
NOTICE: THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT, SECTION 15-48-10 ET SEQ. OF THE CODE OF LAWS OF SOUTH CAROLINA. See here for the full text of the statute.
The general rule in South Carolina is that each party to a contract dispute must pay his or her or its (if the party is a partnership, corporation or a limited liability company) own costs and attorneys’ fees, absent statutory or contractual authority that would require one party to pay its fees and also reimburse the other party for its fees too. Generally, a business contract will provide for recovery of the prevailing party’s attorney fees (and other costs, such as court costs and the cost of other professionals) from the losing party. Attorneys’ fees awarding the prevailing party may be appropriate depending on the nature of the underlying agreement (noncompete agreement, confidentiality agreement, employment agreement, commercial lease agreement, or other one-sided business contract).
Business Contract Remedies
A business contract will generally incorporate both legal and equitable remedies. A legal remedy is the means with which a court of law enforces a right, imposes a penalty, or issues a court order to impose its will. The primary legal remedy is monetary damages.
Equitable remedies are judicial remedies developed by the courts to make a party whole when legal remedies or monetary damages cannot adequately resolve the wrong doing. The five common types of equitable remedies are injunctions, declaratory judgements, specific performance, rescission, and reformation.
Call Our Charleston Business Contract Lawyers
Our Charleston business contract lawyers have significant experience in handling a wide range of contracts and agreements in a number of business industries. To schedule a consultation with one of our contract lawyers today, please contact us online or give us a call at 843-564-5115.