Objective Theory

Objective theory of contract is a doctrine which states that a contract is not an agreement in the sense of a subjective meeting of the minds. However, a contract is instead a series of external acts giving the objective semblance of agreement. This principle states that the existence of a contract is determined by the legal significance of the external acts of a party to a purported agreement, and not by the actual intent of the parties. American law had adopted the objective theory by the late nineteenth century. This doctrine is often shortened to and known as objective theory.

What are the four elements of a valid contract? Businesses and consumers alike need to know before anyone signs on the dotted line because these elements will come into play should the agreement turn sour. From signing up for a cell phone plan to brokering a multi-million dollar merger, contracts are a legally binding method of exchanging promises to fulfill certain actions. A valid contract should have four elements to it:

At least two separate parties entering into an agreement. The agreement can be between two individuals, between an individual and a company or between a company and another company.

The parties are qualified to agree to the terms and conditions in the contract. The parties must be of legal age and have full understanding of what the contract is and the details it outlines.

Both parties are receiving consideration, or value, from the agreement. This is most commonly money in exchange for a good or service, but there are other methods of consideration, especially in the business arena.

The contract is created for legal activities. Contracts are not binding or considered legally valid when they propose illegal activities or violate existing laws in any way.

Breach Of Contract

A party who has agreed to a valid contract can be held in breach of that agreement in a court of law. When one party seeks legal recourse against another for breach of contract, that party...