Enforceable Contract

Essential Elements of an Enforceable Contract

BUS311: Business Law I

Instructor: Michael Huang

October 12, 2015

Essential Elements of an Enforceable Contract

What is a contract? Contracts, can best defined as an agreement made between two or more parties; moreover contracts create legal obligations among the offeree and the offeror. In order for a contract to be enforceable by law, it must contain the five essential elements: offer, acceptance, consideration, legality, and capacity. In this paper I will discuss the five essential elements and how those elements related to my first home purchase experience with Richmond American Home. Lastly, I will explain the circumstances of a breach contract and possible remedies.

Offer

An offer is one of the first steps taken when entering into a contract. It is the foundation of a binding agreement because it establishes the subject matter between the parties. According to Stim (2010), “An offer defines with some specificity the subject of the transaction, when it happens, the price of the transaction and any conditions that must occur for the contract to go forward.” To establish an offer, the offeror must intend to construct a legal obligation, or must appear to intend to construct a legal obligation.

When Richmond American Homes (offeror) approached my husband and I (offeree) about building us our dream home, they were prepared with a written offer that included terms and conditions. It was stated that the seller agreed to sell if the buyer agreed to purchase real property in the substantial conformance of elevation B, Sandra Model home plan. We would have to consent to paying the base price of the home. If agreed upon the terms and conditions RAH would apply a percentage from the base price to our cost of the “buyer’s onsite options” at the home gallery.

Acceptance

Another crucial step in enforcing a contract is the acceptance of the offer. An acceptance is an indication and willingness to conform to...