Student

Introduction

A significant business law text holds that one of the essential elements for a contract to be valid is capacity. Capacity refers to one’s ability to both “incur legal obligations and acquire legal rights”. (Mallor et al., 2010, p. 378). Those classes of people who are considered incapable or lacking capacity include minors, the mentally ill, and even the intoxicated with all would have the right to avoid the answer while incapacitated. One online source refers to this concept as “Competent Parties” meeting that a contract is only valid when both parties are considered competent at the time of formation. (State of Texas, 2009).

Legal Elements of a Contract

According to this same online source, the legal elements of a contract include Offer, Acceptance, Legal Purpose/Objective, Mutuality of Obligation or the “meeting of the minds”, and Legal Consideration. An offer is defined as “the willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it.” (State of Texas, 2009). Another online source notes that in the acceptance of the offer is necessary for the contract to even be valid and that a counter offer is not acceptance and will typically even be treated as rejection of the original offer. (Larson, 2003). Legal purpose or objective refers to the original intentions of the parties bringing together the contract. For example a contract for the illegal distribution of drugs is not a binding contract because its purpose is not considered a legal intention. Mutuality of obligation is more commonly known as “the meeting of the minds” and refers to the parties “mutual understanding and a sense to the expression of their agreement”. (State of Texas, 2009). Or put another way the parties must agree to “the same thing, in the same sense, at the same time” and this is based on a very objective standard by which what the parties actually said and did and not their...