The Small Business Bible: Everything You Need to Know to Succeed in Your Small Business, 3rd Edition

Chapter 32

Legal-Ease I

It is easier to stay out than to get out.

—Mark Twain

Like taxes and insurance, law is one of those areas that entrepreneurs would rather not think about, and when they do, it is usually unpleasant. Yet you need to know what you need to know. There is a litigation explosion in this country, businesses are the prime targets (known in the trade as “deep pockets”), and you need to arm yourself with knowledge. Therefore, in this chapter and the next, you will get a primer on business law so that you know what to avoid and what to talk to your lawyer about if something does go wrong. One caveat: Although I am a lawyer, no book can take the place of an attorney who knows you, your situation, and the facts. So although the general information I provide can educate you, if you do find yourself in legal hot water, you are advised to meet with a lawyer in person.

Contracts

Contracts are the easy stuff. A contract is like your personal set of laws. As long as you bargain in good faith and the subject of the contract is legal (e.g., you can't legally contract to open a house of prostitution), just about anything that you and the other side agree to will fly. However, not every promise is legally enforceable. To create a legally enforceable promise or set of promises, three requirements must be met that raise those promises to the level of a legal contract.

Offer

The first part of any contract is a clear and unambiguous offer. “I will buy 200 pounds of your flour at ...