A Contract and Its Essential Components
The essential elements of a contract include offer and acceptance, legal relationship, consideration, consent, and legal capacity. Offer and acceptance is a binding element, which necessitates the contract to be formed based on the existence of parties that offer and accept the issue being addressed. Some of the features of an offer are critical in the formation of a contract. In this case, it is vital to realize that an offer is not targeted to a specific individual but is made to any person or organization.
Similarly, one is bound to an offer as long as the terms of the offer are met. Therefore, an interested party should accept all the provisions of the offer. On the other hand, an offer can be withdrawn before it is accepted. During this incident, the party who was offering the contract must communicate with the other party about withdrawal. The acceptance of an offer demands that the party should provide a valid statement or adopt an act concerning the issue.
The presence of a contract demands that the participants enter into a legally binding concurrence. Although this is rarely covered in detail, the circumstances under which the agreement is established should infer the legal relations between the parties. For instance, offering a neighbor a mower to cut down grasses does not create a legally binding relationship. However, if the neighbor agrees to be paying $50 for using the mower monthly, the law will appreciate that a contract was agreed. Such scenarios are also applicable in the commercial sector.
Consideration concerns the price that is paid by the party who accepts the offer. Although it is not compulsory to be in monetary terms, it should always be something of value that is appreciated after the offer. In this regard, consideration should be legal and something that can be performed or possible. Notably, the size of the consideration should not be of similar importance or value as the item or issue on offer but should be acceptable.
A person who enters into a valid contract should be legally capacitated. This implies that there are some exceptions for individuals signing a contract. Some of the individuals restricted from entering valid contracts include mentally challenged people, minors, bankrupts, people representing corporations, and prisoners. Through the evaluation of the legal capacity of individuals, contracts that are legally binding to parties can be signed. Therefore, young people, mentally impaired individuals, bankrupt and prisoners should not enter into contracts since they have no legal right to validate the agreement.