Featured Stories

Other Pamplin Media Group sites


Legal issues complicate business ventures

Attorneys suggest people shouldnt try to act as their own business lawyer


What makes a contract a legal, binding document is not as well known as it should be, said Attorney Jay McRostie of Young Twedt McRostie of Gresham.

That topic brought business owners and employees together at last week’s luncheon sponsored by the Sandy Area Chamber of Commerce.

The contracts session was led by three attorneys — Neil Young, Rod Barker and McRostie, who did not give anyone legal advice, just a little education.

The educational session brought out six aspects that are present when a contract is considered legal.

Offer and acceptance

“You can’t have a contract unless you have an offer and somebody accepts the deal,” McRostie began his presentation.

An advertisement isn’t an offer, McRostie said. Instead, it is considered an offer when a potential customer walks in and asks if an item is for sale at a specified price.

But the store’s owner must accept that offer before it can be considered a contract.

Mutual agreement

The terms of the contract such as the price, method of payment and time allowed also must receive agreement by all parties involved.

“A really good offer will contain all of the terms,” McRostie said, “stated succinctly and clearly. If the terms are really clear, someone has the ability to say, ‘I know what the proposed deal is, and I’m OK with those,’ and then you have mutual agreement.”

Warning those present about a common mistake, McRostie recalled the many times people have come to him saying, “I signed this (contract); what do you think?”

“Usually, people come to us (attorneys) asking how they can get out of a contract they signed before they knew the terms,” he said. “That begs the question of whether there was mutual agreement to start with.”

Consideration

McRostie reminded the audience there must be consideration “going in both directions.” Without the usual types of consideration, the transaction would be considered a gift.

“If you don’t have consideration, you don’t have a contract,” he told the chamber members and guests.

Finally, he mentioned the consideration could be a promise to pay or reimburse.

Competency

All parties to an agreement must be competent to enter into the pact, McRostie said.

Lack of competency can be determined by age, mental state or legal status. Therefore, McRostie suggested to anyone dealing with children to consider they cannot legally enter into a contract, and adults are usually held responsible.

“If you don’t have a competent party,” he said, “you don’t have a two-way deal.”

Legal deal

The contract must be for the sale of items that are considered legal. As an example, McRostie said the sale of drugs in Oregon today is not legal; therefore, it is not enforceable.

Anything that’s legal can become part of a contract, he said, but other examples such as extremely high rates of interest or a plan to “launder” money would not be part of a legal contract.

Forms needed

Most contracts must be in writing such as sales of goods or real property, especially anything over $500.

“The point in a contract is to enforce the deal when somebody skips town,” McRostie said. “If you don’t have it in writing, it’s really hard to prove that a deal really exists.”

In that case, a witness could testify that he or she overheard the verbal deal between the parties.

Seek legal advice

The only legal advice McRostie gave chamber members was to go to a lawyer before signing any contract or entering any deal.

He suggested that spending a few minutes with a lawyer and allowing the lawyer to review a potential contract for an hour or two could prevent many hours of stressful work and many dollars of expense to get back to square one.

“You (business owners) don’t think about six different things that lawyers think about,” he said. “The reason you don’t is because it’s not your world. Our world is to help you with what you don’t know, not what you do know.”

But it is important, McRostie said, to select an attorney qualified for each specific question. Citing employment law as an example, he said it is so complex that only certain attorneys are competent in that field of law.

Chapter two?

By the time the luncheon hour had expired, many in attendance suggested there should be further discussion on other similar topics.

Chamber Board President Madeleine Eno told the group that could be arranged, and McRostie said he or his partners would return.