What is a Contract?
Contracts are legally, binding agreements between two or more parties which establish a set of promises, which if breached, allows for a legal remedy. Contracts pervade almost every aspect of our lives. For example, contracts are common between consumers and banks, insurance companies, utility companies, landlords, mortgage companies, and vendors.
Valid Contract Requirements
Contracts are only legally enforceable if they meet certain requirements. State and federal laws determine what requirements are needed, but generally, contracts must have the following elements to be valid:
The contract must identify the parties who are making the contract. Generally, anyone can enter into a contract, excluding minors, the mentally incompetent or certain felons.
A valid contract must be made with mutual and free consent from all parties. This means a contract can be invalidated if any party agreed to the contract under duress, through fraud, through menace, or by mistake. For example, you are forced to sign a contract while someone holds a gun to your head this contract is not legally enforceable.
A contract must have consideration to be valid, which means each party must provide or promise something valuable or needed by the other party. If there is no consideration, there is no contract. For example, if a pool company agrees to build you a pool but you have not promised or paid anything in return, you cannot sue the builder for failing to build the pool because they did not receive any consideration.
Offer and acceptance
A valid contract must also have an offer and acceptance. For example, under a renter's contract, the landlord offers an apartment and the renter accepts it.
The contract must have a legal purpose which does not violate the law. This means the subject or object of the contract must be possible, definite, and lawful. For example, if you have a contract to produce drugs for a drug dealer, because this is an illegal act and the contract is not legally enforceable; the drug dealer will not be able to seek legal redress in court.
Does the contract have to be written?
So does a contract have to be written to be legal and valid? No, oral contracts can be valid; however, there are certain contracts which must be in writing to be enforceable. It is important to talk to a lawyer if you have questions about writing a contract, but generally, contracts must be written if they deal with real property, the contract exceeds a certain dollar limit, the contract will not be completed within a certain time-frame, or the contract pertains to certain debt obligations.
Written contracts offer protection
As mentioned above, not all contracts have to be written to be valid, but experts argue a well- written contract offers the best protection to avoid disputes. The good news is you will not always need a lawyer to construct a contract. In fact, if the contract is simple, you may be able to construct the contract on your own and have a lawyer simply review it or you can find legal help online.
Contract Term of the Day
Latest Contract Question
A voluntary surrender allows you to avoid repossession but may still create a deficiency.
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