Legally Binding Agreement

What is a Legally Binding Agreement?

There are 400,000 lawsuits filed in the United States every year.  A binding agreement is one of the best ways for businesses to protect themselves from legal action and keep their customers content.

Creating a contract or other defined terms lets others know what to expect. This prevents them from taking legal action if they don’t receive it.

It’s important to remember that not all agreements are legally binding. They must meet certain requirements to hold up in court.

If you know how to create legal agreements now, you’ll avoid legal and financial consequences later. Read our legal agreement guide to learn how.

Making a Binding Agreement

A binding contract is made up of two stages; agreement and consideration. They make the terms of the agreement acceptable and ensure it’s legally binding.

The agreement stage involves creating terms and conditions and using counter-offers. Oral agreements work in most cases. Written records are required for real estate deals or agreements that last over a year. Only competent adults or their representatives can enter into a legal agreement. 

Consideration refers to the value exchanged between parties, such as providing goods or services in exchange for money. The consideration phase is also when other parts of the agreement such as obligations, necessary performance, payment terms, and what to do if the contract is breached.

Additional terms known as boilerplate provisions may be added to a contract in certain circumstances. They include arbitration, entire agreement, and force majeure clauses.

An agreement may become non-binding if it meets certain conditions. It must not be used to obtain illegal goods, avoid regulations, offer gifts, or limit the legal rights of family members.


A legal agreement can be either written or verbal. There are several types to know of including bilateral and unilateral, waivers of liability, and email.

Bilateral contracts are when both parties promise to provide each other with goods or services. Unilateral contracts are a one-way exchange where one party gives to another so that they will keep a promise.

Businesses use a waiver of liability to prevent lawsuits if customers or employees are injured.  They may or may not be legally binding depending on where you live. 

Certain states like Virginia make it almost impossible to use a waiver of liability in court. Most other states allow them as long as they meet certain requirements. In Missouri, for example, they use clear language, be clear and honest, and not excuse gross negligence.

Email communication is another way to create a binding contract. If a message contains an exchange and terms with electronic signals to represent agreement, it becomes legally binding.

There are several ways to enter into a legal agreement. You must know what they are and how to determine if they’re worth signing. Communicate with all other parties involved and get legal help if necessary.

Where to Find More Legal Agreement Information 

A binding agreement involves two parties who set terms for the exchange of goods or services. It lets them know what to expect and prevents legal issues in the future.

Non-binding contracts don’t meet the necessary legal requirements. They may not have been agreed on or include illegal terms. These won’t hold up in court and should be avoided when trying to reach an agreement.

Contract law is complex and requires more study to learn the exceptions to the general guidelines we’ve mentioned. Read the rest of our contact for more relevant law tips.

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Christophe Rude

Christophe Rude

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