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Tips On How To Use A Contract

The below information is not intended as a comprehensive or “complete” list and is intended only as a few points for you to consider when using contracts in the course of business.  For further help with writing, forming, and enforcing contracts, contact us. 

Some tips on how to properly use a contract. 

All too often we encounter individuals with a situation that looks something like the following:  

(1)  The business owner (or his/her agent) purchases a form contract from a lawyer or office supply store.  

(2)  The business’s owner (or agent) mentions the contract to the customer and the business owner personally signs the contract document.  

(3)  The business gets the project done in a largely (if not completely) satisfactory way. 

(4)  The customer either refuses or is unable to pay the business for services completed/products delivered.  

At this point, what can a business owner do?  

You spent good money on a business contract, but unfortunately it was probably not validly formed under the law of New Mexico.           

In the above situation, the business owner is typically unable to recover under the contract.  Sometimes, we can argue for a client under a “quasi-contract” or “quantum meruit” theory of recovery—this is the Latin language phrase for saying “that it would be unfair to allow the person benefitted by the business to keep the goods/services without paying a reasonable price for them, therefore the court should give the business owner a judgment in their favor”—but this is a difficult legal argument with only partially successful results.  

The following is a far superior way to handle business contracts:

(5)  Make sure the contract favors your interests and is legally enforceable (you will need an attorney for this part). 

(6)  Ensure that there are provisions for the recovery of attorney’s fees in New Mexico, because you may end up having to pay attorney’s fees if the other side “breaches” the contract. 

(7)  Ensure that no contract is being signed with someone under 18 years of age; or alternatively ensure that their parent or legal guardian signs the contract on their behalf.

(8)  Ensure that the person is of mental capacity (including no drunkenness or intoxication) and can sign the contract in their “right state of mind.”   

Provide the other party has an opportunity to view the contract with plenty of time and discuss terms that will provide both parties with a “fair bargain.”

DO NOT begin working on a project/delivering goods until the OTHER PARTY has signed and dated the contract.  NOTE:  there are some exceptions to this—like the provision of emergency services or medical services, but in most situations, waiting to work until the other party has signed is a “good” move you as the provider of goods and services.  

(9)  Ensure that the signing party set forth no “sneaky” unauthorized edits to the contract (i.e. crossing out provisions with ink followed by the signing parties dissent from the contract).

(10)  After both parties contemplate the contract, make sure that the contract is signed, initialed, and dated. 

(11)  Keep the original copy of the contract in a safe place and provide the signing party with a copy (if possible). 

The above steps can be more difficult than they seem!  For more tips on how to create an enforceable “iron-clad” contract that will set your business on solid legal footing, contact us.  

DISCLAIMER: The legal analyses and blog materials on Troon Law Group, LLC’s website are marketing materials and are not legal advice for your individual situation. These materials are opinionated content and reliance upon the following materials is not advised. While this article is written by a licensed attorney, Troon Law Group, LLC and its employees are not your attorney(s) and reading and/or acting upon this article does not create an attorney-client relationship between you and Troon Law Group, LLC or its employees. This article provides GENERAL legal information and should not be used as legal advice. Reliance on this information for your personal situation is NOT recommended, because each case is individualized and stands on its own facts and legal foundation, therefore you should consult with an attorney AND NOT rely on this information in lieu of retaining legal services.