Business Law

A contract is a "promise enforceable by law." The promise may be to do something or to refrain from doing something. The making of a contract requires the mutual agreement of two or more persons, one of them normally making an offer and the other accepting it. If one of the parties fails to keep his or her promise, the other is entitled to legal recourse against that person.

There are six requirements necessary for a contract to be valid:

1. An agreement which usually consists of an offer and an acceptance of that offer.

2. The agreement must have consideration which is something bargained for and given in exchange for a promise.

3. The parties must have the capacity, or legal ability to contract.

4. The contract must be based on the genuine assent of each party, that is, both parties must be agreeable to the terms of the contract.

5. The subject matter of the contract must be legal. An agreement to break the law would be illegal, for example.

Some contracts must be in proper form. Even though courts will enforce an oral contract, some categories of contracts must be in writing to be legal.

(Vangelisti, Online)

Consideration is a key to a valid contract. A more familiar term for consideration would be money. However, consideration may consist of anything deemed of "value" to the parties involved.

Requirements for a valid offer

1. There must be genuine intent to contract

2. It must be communicated to the acquirer

3. It must be certain and definitive in its terms and conditions

Both parties must be free of duress one from another

(Findlaw, Online)

Accepting an offer

The acceptance must be communicated. Prior to acceptance, an offer may be withdrawn. An offer can only be accepted by the offeree, that is, the person to whom the offer is made. If the offer specifies a method of acceptance, acceptance must be by a method that is no less effective from the offeror's point of view than the method specified. The exact method prescribed may...