The Essential Elements Of A Contract

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A contract is simply a binding promise between parties which a court will enforce if not carried out. Contracts are essential for modern life. Without them commerce could not happen as people could not rely on the promises of another if anyone could just pull out of their commitments at any time.

So how are contracts formed? Well there are several elements to make a valid contract.

1. There needs to be an offer from one party to another. An example of an offer would be "I will paint your house for $ 500". The offer here obviously being to pain the house for $ 500.

2. The offer must be accepted by the other party. This is key for the creation of the contract. Without a valid acceptance then there can not be said to be an agreement between the parties. It is important to note that where an offer is made by the first party and a counter offer is made by the second party then this brings the first offer to an end.

3. There needs to be consideration in the contract. Consideration is when both parties offer something of value in return for the other promise. That something can be anything of value to the person providing it (eg money, services, physical goods etc).

4. The parties to the contract must intend that the promise will be legally binding. Lots of promises are made rashly and. Only those promises which are supposedly to be legally binding will benefit from the protection of the courts.

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