Elements in a legally enforceable contract

Contracts: Contracts are a very important part of business agreements. Before two parties form an agreement it is essential that they know their duties and benefits well. Each party is required to perform its duty. Contracts are promises that are enforceable by law. Two parties are believed to have contracted if they form a legally binding or valid agreement between themselves. A contract must have some essential elements for being considered valid and enforceable. Law also provides remedies for a breach of contract. These remedies include general damages, consequential damages, reliance damages and specific performance. Contracts arise when a duty comes into existence because of a promise being made by one of the parties. These essential elements of an enforceable element are discussed below:

  1. An Offer:

There are two parties at least in a contract and one party makes the offer. The offer demonstrates the party’s willingness to enter into a bargain. It invites the other party’s assent to the bargain through an offer. Actually, both offer and acceptance are required to prove mutual assent between the parties entering a contract.

  1. An Acceptance:

Once a party has made an offer it shows its willingness to enter into a contract. However, there are two parties entering a contract and the other party should also demonstrate its willingness through its acceptance of the offer. Moreover, the acceptance must be in strict compliance with the offer. A contract should not change the terms of an offer and if it does the offer is considered rejected. In the common law, the mirror image rule is used. The mirror image rule requires the acceptance to mirror the terms of the offer. Otherwise, if conditions are changed or even if new ones are imposed, it is considered a counteroffer and not an acceptance. However, UCC does not require any mirror terms. Acceptance in a form that indicates an intention to form a contract is considered valid.

  1. Legality of purpose:

The purpose of the contract for which the two parties are entering an agreement has to be legal for a contract to be enforceable. A contract to do something illegal, say the illegal distribution of drugs or arms would not be considered valid or enforceable. Legality of purpose is an important factor deciding the validity of contracts. Therefore, contracts should be formed regarding valid and legal issues only. Illegal contracts cannot be taken to the law for a decision.

  1. Consideration:

In most common terms it is the payment or money that a party pays the other in exchange of goods or services. However, consideration need not always be monetary. Other types of benefits that are exchanged are also considered a consideration. In absolutely simple terms it is what the promisor pays the promisee to obtain something in return or what each party receives from the contract. It has to be something valuable, like you pay money and get pizza in return. You are getting pizza and the other party gets money in exchange. You are entering a contract and making an offer to pay for a pizza. The pizza maker delivers you a pizza as per the promise. You pay the money and both sides have fulfilled their duties in the contract.


  1. Legal Capacity to enter:

The two parties should have the legal capacity to enter a contract. In most US states it is the legal age limit that renders people legally capable or incapable to enter into a contract. Generally, minors cannot enter a contract in the US except in a few exceptional cases.

  1. Genuine Consent:

The parties to enter a contract should do so genuinely and of their own free will. It means they should give their consent to be bound by the agreement without any undue influence. Mistake, misrepresentation or duress might all render a contract void. If there has been a mistake while forming the contract agreement, it will be considered invalid. Similarly, if one party has misrepresented facts in its own favor, the contract is not enforceable. A contract cannot be formed under duress either and if one party has been pressurized to enter the contract, the contract is invalid.

However, contracts are not simple and there are several twists which can be understood only with the help of an attorney. Contracts can be highly complicated and they are of several types. There are unilateral and bilateral contracts and even oral contracts. The oral contracts too can be enforceable under certain conditions, but some forms of contracts have always to be in writing. The statute of frauds lays out five specific categories of contracts that have to be in written form in order to be considered valid and enforceable.