![]() Not everyone is eligible to form a contract, which is where capacity comes in. This element may seem unnecessary however, it simply prevents individuals from trying to form contracts involving unlawful promises or consideration.įor instance, in states where online gambling is illegal, like Utah, an individual would likely be unable to form a contract where they pay someone’s online gambling debts in exchange for a service. Legality refers to the subject matter of the contract and whether it is legal. Read More: Are Verbal Agreements Legally Binding? Legality In the example above, the son could have created a written Sales Agreement with his mother, which would have demonstrated his mother’s intention regarding the contract. Most often, individuals can avoid uncertainty surrounding intention by putting their contract in writing. So, although there was an accepted offer and consideration, a court may still be unsure if the mother intended to form an actual contract with her son. In this example, there is a chance that the mother was joking or humoring her son when she agreed to trade her car as payment. After the son tiles the floor, the mother refuses to transfer the car’s Bill of Sale to him. In business dealings, it is often understood that the parties expected to be bound to a contract, but things can get tricky with promises formed between family and/or friends.įor instance, a son tells his mother that he will tile his mother’s floor over the weekend in exchange for one of her old cars. This phrase is typically applied to mutuality or intention and simply means all the parties involved in the contract actually intended to create a valid, enforceable contract. Read More: What Makes a Contract Invalid? Mutuality or IntentionĪt some point, you may have heard the phrase “meeting of the minds”. With consideration, remember that past consideration (meaning money, services, or something else that was provided before the offer was made) is typically not valid when forming a contract. In this case, the consideration is a right, which is being exchanged for another right. the ability to use each other’s backyards). ![]() ![]() In fact, consideration can even be a right, interest, or benefit.įor instance, if you and your neighbor agree to share access to each other’s backyards, you and your neighbor are offering a right to each other (i.e. Oftentimes, consideration is money, but it can be a service, an object, or anything else of value. ConsiderationĬonsideration is essentially the benefit both parties receive for performing the contract (i.e. For instance, if I offered my neighbor $40 to mow my lawn and he mowed my lawn without verbally accepting my agreement, his action suggests he agreed, and I would have to pay him the $40 as promised. The interesting thing about acceptance is that it doesn’t need to be said or written to be conveyed it can be determined through conduct. Offer and acceptance go hand-in-hand, and although acceptance may seem redundant, it is an important element that ensures contracts are not formed without being properly acknowledged, agreed, and accepted. Acceptance simply means that the offer presented was accepted. The offer is usually the terms that make up the contract.įor instance, when a caterer wishes to create a Catering Contract with a client, the offer is the terms of the catering service, which includes the catering schedule and the cost of the service.Īfter an offer is presented, it can be accepted or declined. Offer and AcceptanceĪn offer occurs when one party presents something of value that they wish to exchange for something else of value. In this post, we help prepare you for signing your next legal document by exploring the elements of a valid contract. For instance, a Residential Lease is a contract between a landlord and tenant in which the tenant pays the landlord rent in exchange for a place to live. It involves one party (or a group of parties) offering something of value to another party (or group) as payment for a service, item, action, etc. In fact, a valid contract is made up of several elements and, if any of the required elements are missed, the contract could be considered invalid and incapable of being enforced.Ī contract is an exchange of an act or promise between two or more individuals or business entities. There are more aspects to a valid contract than just agreeing to some terms and signing a piece of paper.
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