Elements of a Contract

In doing business contracts are a common form of agreement that can be enforced legally. It is important that when entering into a contract, each party understands the elements of the contract. A contract is a legal binding document, which if executed properly can be upheld through the court system. The nature of contracts “deals with the enforcement of promises” (Mallor, Barnes, Bowers & Langvardt, 2010), but every promise is not enforceable. There are elements that must be included or the contract cannot be enforced.

The basic elements of a contract include the offer, an acceptance, consideration, the capacity to contract, and must be legal.

Before the offer to enter into a contract, there must be some form of negotiation or mutual consent. That can be as simple of a person responding to an advertisement. If I advertise to sell my red Mustang and you offer to buy it, the buyer expects to get a red Mustang after he meets the requirements. The seller will expect the appropriate compensation and will give the Mustang after that condition is met. If a proposal is not clear or it is not legal, then the contract is not binding. In the case of services provided, the same applies. If I agree to do a roofing job for a client, that client expects me to do the job satisfactorily and I expect that I will be paid a certain compensation for the work completed. The “present intent to contract” is important for the proposal to be considered an offer. This indicates to the parties involved that they are serious about the contract they are about to enter in if the parties agree.

Once the offer is made the terms of the contract must be accepted by all parties that are named in the contract. Each party must voluntarily agree to the terms of the contract.

Once the offer is made and accepted, there must be consideration. The text states that “consideration is legal value, bargained for and given in exchange for an act or a promise” (Mallor, Barnes, Bowers & Langvardt,...