A contract is an agreement between two parties. The purpose of a contarct is to aid in formalizing an agreement between two parties regarding a particular subject. However, for the contract to be effective, there should be an offer and an acceptance, Moreover, it should be of legal capacity, and the parties should enter into the contract at their own will. Any undue influence or false statements and illegal dealings could render the contract void. Below are some of the elements of a valid contract.
Components of a valid contract
Intention to create legal relations
A contract will not be brought into existence just because two parties have agreed. Both parties must agree to enter into a legal agreement. For example, contracts are seen as including a clear intention to create a legally binding agreement. However, the law assumes that domestic and social relations cannot create a legal contract. For instance, an arrangement between families like siblings will not be presumed to be a legal contract.
Not everybody has the legal capacity to enter into a contract. Some people may not have the capacity to make the decisions for themselves, and they include minors, people who have mental impairment, bankrupt individuals, prisoners, and corporations. Therefore, entering into a contract with the above people will render the contract void because it will not be recognized by the state.
Often in a contract, something of value is promised in exchange for an action or non-action sometimes.It can, therefore, take the form of money or an effort, an agreement not to do something or a promise to perform certain services. Consideration is therefore defined as the value that motivates the parties to agree. It is used to distinguish a contract from a gift because they can easily be mistaken.
Acceptance is what determines whether the contract will be there or not. It may be expressed through words, actions or some performance as stated in the contract. If the accepting party is comfortable with the terms of the contract, they will agree to it but if not, they will reject it, and there will be no contract.
The contracting parties must have a meeting at some point to express themselves regarding the contract. When they understand and agree to the basic terms, they are believed to be mutuality. This has to happen because both parties need to know what they are getting themselves into. They also have to agree on the consequences of violating the contract.