Contracts

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Contracts

Contracts are commonplace in our daily lives. Contracts can be flexible, very complex, or as simple as an exchange of two promises. The promise can be very simple, such as mowing the lawn, or selling a lawnmower. For there to be a contract there must be consideration. Consideration is a formal way of saying “something with value or perceived value.” The consideration can be the promise to perform a service or provide a good. Some contracts are an exchange of promises.

Types of Contracts

In Virginia, as in most states, contracts can also come in many different forms.  For example, you can have a valid and enforceable oral contract or written contract.   To give contracts even more flexibility, Virginia contracts can be express, such as a detailed written agreement, or implied, where the customary practices, relationship, and the actions of the parties are evidence of an implied contract between them.

It is important to keep in mind that although contracts can come in various shapes and sizes, the form of the agreement can impact the rights of the parties.  For example, because of a doctrine known as the statute of frauds, as well as some other Virginia statutes, many Virginia contracts must be in writing to be valid and enforceable.  As a result, it is always important to work with a skilled and experienced contract lawyer who can help navigate you or your business through the complexities of contract law.

Virginia Contract Law

Many legal disputes arise out of and are resolved with contracts. A contract in its most primitive form is simply a legally enforceable agreement. In the area of law, for a contract to be legally enforceable, several requirements must be met including an offer; acceptance of that offer; mutual understanding of the agreement; capacity to enter into the agreement; an item or service; consideration in exchange for the item or service; and legality of the contract itself, including its terms, provisions, and type of consideration, item and service being exchanged.

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Negotiating Contract Terms, Provisions, and Agreements

A skilled negotiator can make a tremendous difference in the results and outcome of a business deal. Negotiation is an art. It involves complex understandings of the interests of multiple parties, the law, the applicable industry, and the surrounding circumstances. With skillsets in both litigation and transactional law, our attorneys bring a total package to a negotiation. Even in circumstances where the parties wish to “work the deal out themselves without an attorney,” we often spend time preparing our clients through mock negotiations and exercises to maximize their effectiveness and produce positive results.

Negotiation: Preparation, Preparation, and More Preparation

Negotiation, like litigation, favors the most prepared party. The most thorough and prepared negotiator is often the stronger negotiator. Skillful articulation, witty retorts, and charisma will tip the scales in your favor. However, preparation will win the day. It is important to understand the other party and what they want, also know what they will bend on and what will break them. Focus more on the interests at hand as opposed to each party’s position. Be prepared with various alternative theories and contingency plans. If you have a solution to their concerns, then those concerns will not become problems for you.

Tortious Interference with a Contract

In Virginia, tortious interference with a contract generally occurs when one party knows of the existence of a valid contractual relationship or business expectancy between two or more other parties but intentionally interferes or disrupts the contract. If the interference is bad enough it can cause a breach of contract or termination of the contractual relationship, which damages one or both parties. Besides, certain facts and factors, such as “at-will” employment, can have an impact on the elements involved in proving this cause of action.

We strongly recommend that you consult with a business lawyer or contract lawyer who is knowledgeable in litigating this cause of action. The Virginia case law is significant and continuing to develop as Virginia courts explore new fact patterns in the digital age.

Breach of Contract

Breach of contract is one of the most common claims and causes of action for a lawsuit, which is not surprising given the complexity of business arrangements and that so many contracts are drafted poorly or without the parties fully understanding their consequences. In Virginia, to prove liability for a breach of contract, lawsuit the plaintiff must show that the other party, without legal excuse, failed to perform an obligation placed on it by the contract or Virginia Code § 59.1-507.1. “Breach of contract: material breach”, in the absence of a written agreement. Also, under Virginia contract law, there is an implied standard of good faith and fair dealing that is read into every contract. This is not a separate cause of action but could be used to independently show or determine that there was a breach of contract. Our Virginia contract attorneys have extensive experience litigating breach of contract cases involving loan agreements, patient contracts with doctors’ offices, copyright licensing, non-disclosure agreements, and employment contracts.

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Virginia Blue Pencil Rule

It is extremely important to consult an experienced contract attorney when drafting, reviewing, or negotiating a contract as not all agreements are legally enforceable. This is especially important in Virginia as case law has shown that Virginia Courts refuse to “blue pencil” contracts. The “Blue Pencil Rule” permits a court to modify an otherwise unenforceable provision in a contract, usually a restrictive covenant, to make it reasonable.

Many contracts contain a severing provision in its miscellaneous or general terms section. Blue penciling is different from a severing provision in a contract. Severing allows the complete removal of an unenforceable provision from a contract that is otherwise legally enforceable, while blue penciling provides the court the power to rewrite invalid language in a contract to make it enforceable. However, as Virginia does not permit blue penciling, drafters cannot rely on the courts to correct errors or oversights made while drafting an agreement to make their unenforceable language enforceable.