A contract is a legally enforceable agreement, whereby the parties to a contract make certain promises that are enforceable in a court of law. The elements to a contract must be established to become a valid contract.
A contract is a legally enforceable agreement, whereby the parties to a contract make certain promises that are enforceable in a court of law. The elements to a contract must be established to become a valid contract. Also, the parties to a contract must have the capacity to enter into a contract.
Capacity of the Parties
An individual must have the capacity to enter into a contract. In other words, both parties to a contract must be competent and possess adequate judgment to enter into a legally enforceable agreement. Minors and individuals that possess a mental disability may not have adequate judgment to voluntarily enter into an agreement. Most contracts that are entered into by a minor are voidable at the option of the minor. Also, an individual who lacks the ability to comprehend the totality of the agreement and any consequences are generally deemed incapable of having the capacity to enter into a legal contract.
Offer and Acceptance
The basic aspects of a valid contract include an offer and acceptance. One party asserts an offer to enter into a binding agreement, and the other party has the power to accept or reject the offer. Acceptance of an offer establishes an agreement, whereas a rejection of the offer does the opposite.
In addition to an offer and acceptance, consideration must be present to make the contract legally enforceable. Consideration is the exchange of promises between both parties to a contract.
Meeting of the Minds
There must be a meeting of the minds between the parties to a contract or a mutual understanding of the essential terms of the contract. A contract may be voidable by either party, if there has been mistake or misunderstanding as to an assumption on which the contract is made. Other factors that may affect the legality of an otherwise valid contract include physical or emotional duress by either party; one party improperly influences the decision of the other party; and when either party misrepresents essential terms of the contract.
Illegal contracts are unenforceable in a court of law. A contract may be illegal as to its formation or performance. A contract that calls for acts that are criminal or against a state’s public policy are generally considered illegal and unenforceable. Therefore, neither party may seek legal remedies to enforce the contract.