A loan contract that is enforceable is any legal contract carries the force of law behind it. The loan agreement is a legal agreement between two parties that is legally binding. These agreements must not be restricted by any laws. An unenforceable contract is one that isn’t backed by law. An enforceable contract requires the parties involved to act to fulfill the terms of the contract.
An enforceable contract has the following characteristics:
• Mutual assent – This is when an agreement is made by both parties to fulfill the terms of a contract.
• Consideration – Something of value must be exchanged.
• Capacity – The parties involved must be competent to enter into the agreement.
• Legality – The terms must be legal.
In Florida, contracts are governed by Title XXXIII of the statutes, that are entitled Regulation of Trade, Commerce, Investments and Solicitations. Contracts are basically an agreement between persons of legal entities, where one party agrees to perform a service or provide goods for payment of money or other services or goods. A loan contract is primarily an agreement where money is given to one party and that party repays the money over time.
A contract is formed when there is an offer and an acceptance between the two parties. This is also known as a “meeting of the minds.” This alone doesn’t constitute a legally binding contract. The contract must not be illegal, such as asking for an illegal interest rate. Another thing that must be considered is if both parties have the capacity to enter into the contract. Generally minors do not have the capacity to enter into a loan contract.
To make a contract binding, an offer must be made and it has to be accepted. Such as, the amount and terms of a loan agreement. This is called “consideration.” A legally enforceable contract must have consideration. Although legally enforceable contracts can be verbal, generally a loan contract is written. Certain types of contracts are required by law in Florida to be written. Written contracts are preferable than a verbal contract. A written contract must have enough specificity to make it enforceable. An attorney should be consulted to ensure that a loan contract meets all the laws of Florida.
There is no automatic right to cancel a contract once the offer has been accepted. The right to cancel a contract is called “right of rescission.” This is limited to certain types of contracts. If a party breaks the contract or commits a “breach” of contract, that party can be sued to enforce the contract. In Florida, if a party wants to enforce a legal written contract, they have five years to file for the suit. Some agreements have a one year deadline to file for the suit. If the deadline has passed, then the party will not be able to sue later. Some loan contracts stipulate that a disagreement or “breach” of contract will be arbitrated. An “arbitration clause” is legal and binding. This means the dispute will be decided by an “arbitrator” instead of a judge or jury. The cost of arbitration is expensive. A party should not enter into a loan agreement with an arbitration clause unless they are willing to not have a judge or jury to hear the case. Also, they will have to pay the high arbitrator’s fee.
Enforceable contracts are easily made in Florida. Whenever entering into an agreement, one should have an attorney to look over the contract.