Consideration is the exchange of added value between parties to enforce a contract. It shows that the two parties involved made an exchange of value, such as home renovation work for money. This creates a valid contract. For more information on this subject and for best practices, read on.
Common Questions
A contract must include an employer offer, employee acceptance, a mutual benefit for both parties, and compliance with employment standards legislation. If one party defrauds the other or is coerced into the agreement, it makes it null and void. Both parties must be satisfied with the contract. The contract must also be confidential and the mutual benefit must be considered new, rather than retroactive. This applies to both the payment and the good or service. Further, the exchange must be considered fair in terms of its value.
Legal Involvement
Both parties, but at least the side extending the contract, should have legal counsel to oversee it. Another best practice is for employers to present employees with work contracts before their first day at the company. This gives them a chance to review and find their own legal counsel, if they choose. Once an employee is already working with the company, any contract changes also need to be documented. If you move an employee to another department, offer him or her a promotion, or so forth, you should document it in writing with approval from both parties. It would help to have legal counsel in this process, as well.
The Rundown
In actuality, contracts are not a legal obligation for the parties involved to have. Consideration is necessary, however, in any case where contracts are used. Having a binding legal document in place can help squander potential issues that arise down the road. What's more, they can provide legal protection by proving both parties agreed to the specific details laid out. If you are an employer without a contract for your employees who now wants to offer one, it is important to consult with legal counsel. If you need help creating one, our HR experts at Peninsula can offer helpful guidance and support. Contact us through our 24/7 employer advice line to get answers to your questions. We are available any day, any time.
