A contract is a written or oral agreement to do or not to do a certain thing.
The essentials of a valid contract are:
1. Capable parties
2. â¨Lawful object
3. Consideration
4. Offer and acceptance
1. Capable parties
To be a capable party, the person must have the legal capacity to contract. Typically, this means the person must be at least 18 years old and of sound mind.
Other competent parties would include:
- Person with authority to enter into contracts on behalf of a corporation
- Person with a proper power of attorney
- Fiduciary given the authority to contract
- Emancipated minor: somebody under 18 who is legally allowed to act on their own behalf because they got married, served in the military, or through court action divorced their parents
2. Lawful object
A contract must be entered into for a legal purpose. For example, if a movie talks about a contract to kill, that is really no contract at all because it is not lawful.⨠A contract like this with an illegal purpose is void. A contract must also be entered into freely, without duress, threats, blackmail, misrepresentation, or fraud.
3. Consideration
Normally when we think of consideration we think of money, but consideration can be anything of value. It is bargained for and received. Consideration can even be love and affection.
4. Offer and acceptance
Offer and acceptance is also called mutual consent or a meeting of the minds. An offer must contain the exact terms and conditions, and the offer must be accepted without changes. The offer must be clear in character, the property must be accurately described to identify the subject matter, and you must have an exact price. You can not offer to buy a house for "a whole lot of money"; you must say one million dollars or the exact amount you are offering.
Do not forget the "or ee" rule!
The offeror is the party giving the offer; the offeree is the party receiving the offer. In real estate, the offer is usually made by the buyer and received by the seller. An offer must be accepted without change by the offeree or the offeree's authorized agent.
Prior to acceptance, an offer or counteroffer can be revoked.
An offer will be terminated by death or insanity of the offeror or offeree; destruction of the property; or a material change. A counteroffer occurs when the seller changes any of the terms made by the offeror. This reverses the legal position of the parties and the offeror becomes the offeree, while the offeree becomes the offeror. This makes the counteroffer a brand new contract.
FAQs
The Five Elements of a Contract
- Offer.
- Acceptance.
- Consideration.
- Capacity.
- Lawful Purpose.
REQUIREMENTS OF A REAL ESTATE CONTRACT
- The contract must be in writing and there must be an offer and an acceptance of said offer. ...
- The contract must have mutual assent and legal purpose. ...
- The contract must identify all of the parties involved. ...
- The contract must identify the subject property.
A valid contract must have five elements: an offer, an acceptance, consideration, competency, and legal intent. A real estate contract must contain a legal purpose, legally capable parties, commitment by offer and acceptance consideration, and consent in order to be deemed valid.
What are the four essentials of a valid contract? ›
For a contract to be valid and recognized by the common law, it must include certain elements-- offer, acceptance, consideration, intention to create legal relations, authority and capacity, and certainty. Without these elements, a contract is not legally binding and may not be enforced by the courts.
What are the 7 essential elements of a contract? ›
What are the essential elements of a contract? There are seven essential elements an agreement must have to be considered a valid contract. The elements of a contract include identification, offer, acceptance, consideration, meeting of the minds, competency and capacity, and contract legality.
What are the 5 essential elements of a valid contract? ›
And even though contracts are infinitely varied in length, terms, and complexity, all contracts must contain these six essential elements.
- Offer.
- Acceptance.
- Awareness.
- Consideration.
- Capacity.
- Legality.
4 Essential Elements of a California Real Estate Contract
The contract must be executed by parties who are legally capable of entering a contract. There must be mutual consent. The contract must have a lawful objective. The terms must include consideration (an exchange of things of value)
What elements must be present for a contract to be valid? ›
Whether a contract is 200 pages or 10 pages, to be a legally binding agreement they must contain six basic elements: Offer, Acceptance, Awareness, Consideration, Capacity, Legality.
Which element is not essential in a valid real estate sale contract? ›
Final answer: The essential elements of a real estate contract include offer and acceptance, consideration, and the requirement that it is in writing and signed. Recordation, however, is not a necessary element for a valid contract.
What are the 4 C's of contracts? ›
This is Part 1 of a beginning lesson on Contracts for the legal studies, business law, prelaw or paralegal student. It discusses the first 2 Cs of any Contract: Consent and Capacity. This lesson should be done with Part 2, which discusses the other C's: Consideration and Complies with the Law and/or Public Policy.
It is vital that a contract meet all the requirements for a contract to be valid. Usually, this involves certain key elements, including clearly defined terms (terms of the contract), mutual agreement among parties of sound mind, and legality, meaning that the agreement cannot relate to illegal activities.
Which is not an essential element of a valid contract? ›
Expert-Verified Answer. Illegal consideration is not an essential elements of a valid contract. Offer - It is the first aspect of a legal contract. There must be a bid, a commitment, or an agreement in contract and there will be no contract if there is no offer.
What are the 5 main elements of most contracts? ›
5 Essential Requirements of a Contract
- Offer. A binding contract must have a specific and understandable offer of a valid item that the other party accepts. ...
- Acceptance. ...
- Mutual Consideration. ...
- Competency. ...
- Legal Purpose.
Five main principles of Contract Law: Offer and acceptance, consideration, intention to create legal relations, capacity, and legality.
