Contract and Legal Clauses of Agreement


In a business partnership, two or more people combine their resources to create a business and accept to share profits, losses, and risks. In such a business, parties enter into a contract that with legally binding terms protects their agreement. The legal provisions or clauses accepted by all partners prevent selfish partners from taking advantage of others. In this case, three partners will need to understand the contractual elements; clauses involved, and develop an agreement before starting the business. Thus, to enter into a legally binding contract, partners must meet all the elements of the agreement and understand the legal clauses involved.

Contractual Terms of Partnership

One of the key elements of a contract in situation 1 is an offer. An offer is a proposal or suggestion expressed by one party to another. In this case, I have expressed a desire to begin a business partnership with my two friends. As the offeror, my two friends are free to make a counteroffer, thus terminating the initial suggestion. They also have the liberty to accept or reject the proposal. My potential business partners can accept the desire in form of conditional acceptance, acceptance by action, or option agreement. A legally binding contract demands that all the parties be aware that they are agreeing to contractual desire (Yonjan, 2019). Thus, since I have made the offer to potential partners, we qualify to enter into a legally binding contract.

Consideration and Capacity

The main purpose of the contract reflects the value or consideration of the agreement. Consideration entails the value agreed upon, whether in form of an item or action. The consideration must be written when signing the contract. Both of my friends must accept the value proposed for the contract to be legally binding. Contractual capacity defines terms with which parties must meet to avoid signing off their rights (Yonjan, 2019). For the legal capacity, parties signing the agreement must not be minors, be of sane mental status, cannot be under drug influence, and should have an adequate understanding of the language used in the contract (Yonjan, 2019). My friend and I are over 18 and meet all the required terms thus are qualified to enter into a legally binding contract.


Legally abiding contracts must involve doing legal actions or operations. The actions of the partnership must observe local, state, federal, or national laws (Yonjan, 2019). My business proposal does not involve criminal or illegal acts. I also understand that involving my friends in such acts could also make them legally liable. I understand other terms or conditions that can make the contract void. They include contracts signed under the influence, duress, or misrepresentation (Yonjan, 2019). My friends must voluntarily agree to my business terms, have to accept when sober, and I should accurately reveal all the contractual information.

Legal Clauses added to the Contract: Partnership Decision Making

One of the available clauses in situation 1 is in terms of decision making. In a partnership form of business, decisions can be made through a democratic approach, a consensus, or delegation. Although all these forms of decision-making processes can be adopted in business operations, it is critical to detail the model adopted in their partnership through writing (Slorach & Ellis, 2019). In a consensus model, all partners have the chance to air their opinions in the decision-making process. The democratic approach involves the casting of votes where partners’ opinions differ. On such an occasion, the opinion of the majority of voters wins the argument (Slorach & Ellis, 2019). I propose that my friends will be silent partners and will I control all of the decision-making processes. My partners however have the will to reject my desire and suggest the use of other models. If they accept this approach, they will have delegated decision-making to me as their manager.

Business Confidentiality

Another clause is the concern is that my partners might someday leave the business with confidential information. In a partnership, all partners are expected to maintain confidentiality regarding business information. When entering an agreement, depending on what is important, some information is classified as confidential. Legally binding contracts prohibit partners from exposing or collecting confidential business information when they are leaving the business (Slorach & Ellis, 2019). As partners, we must therefore understand that we will be held liable should any of us leak such information. To enter into a legally binding agreement, we should therefore put it in writing that business information must remain confidential and within the business even when leaving the partnership. Such terms of contract ensure that the business is secure even when one partner leaves.

Business Dissolution

I suggest that the business will dissolve when any of us decides to leave the partnership. In partnership, the partners may decide to continue or not continue with the business when one partner leaves. In situations where the business is not affected by the withdrawal of one partner, the existing partners can always admit a new partner or continue as they are (Slorach & Ellis, 2019). Upon dissolution, the shares are distributed according to their cuts. My proposal is legal and my friends can accept or reject it while proposing other terms. Depending on what we agree on, this clause is to be written and included in the contract before signing.

Partnership Agreement

The most suitable solution for Dr. John W. Jones and Dr. P. W. Roland is to agree to share the oranges. Although both parties need the Ugli oranges as a matter of urgency, they must realize that they need them for different reasons and methods of use. While Roland needs the orange rinds to make vapor for controlling biological bomb leaks, Jones needs orange juice to create a serum for treating Rudosen disease (“The Case of the Ugli Orange,” n.d). Consequently, the two parties can agree to purchase the 3000 oranges from Mr. Cardoza and share the products they need.

The three individuals will need to enter a legally binding contract that will ensure they all deliver on their duties. Either Jones or Roland should propose an agreement that the other accepts. The two could decide to contribute $ 125, 000 to purchase the 3000 oranges from Cardoza (“The Case of the Ugli Orange,” n.d). The contract must show in writing that while Cardoza has agreed to receive half-price from each of the interested parties, it must also indicate that Jones agree to share the oranges with Roland. Most conveniently, Roland will first get the oranges, collect all the chemicals available on the rinds and use them the create vapor. He must write and sign that he will then pack and send the peeled oranges, all in total number to Jones for making juice. Such terms of the agreement will have created a legally binding contract to be signed by the three parties.


A legally binding contract must entail all components of the agreement before signing. The parties must also understand the terms provided in different legal clauses. Each contract could have varied clauses depending on what the agreement entails. The critical thing is to ensure all the parties understand and are willing to agree. The parties should investigate all the essential matters of a long or short-term relationship to ensure that do not feel trapped before the contract ends.


The case of the Ugli Orange. Center for Youth Program Quality. Web.

Slorach, J. S., & Ellis, J. (2019). Business law 2019-2020. Oxford University Press.

Yonjan, Y. K. (2019). An analysis on major elements of a valid contract under muluki civil code, 2074. SSRN.

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LawBirdie. "Contract and Legal Clauses of Agreement." April 2, 2023.