Key Elements Of A Valid Contract
To ensure that a contact is legally binding, it must be executed properly. It must contain all the necessary elements so it will be considered as valid.
What Makes A Contract Valid
Offer & Acceptance — These are the 2 basic elements a valid contract must have. One party makes an offer while the other party accepts the offer’s terms. Bear in mind that acceptance may take time, whereby the negotiation process will happen until both parties reach an agreement.
Legal Object — The agreement’s subject matter should be legal and both parties must agree to the terms, be mentally capable to carry out the agreement, and be over the age of consent.
Consideration — The element of consideration exchanged in the contract is very crucial. This is not just limited to money. In fact, it can include an interest, a right, or a benefit.
Verbal & Written — There are certain oral agreements that can actually be enforced; however, there are some also that are invalid unless they are put into writing. Those involving a real property, a huge amount of consideration or debts, or contracts that can’t be carried out for some time must always be in written form.
In other words, a contract is considered valid when the agreement is legal, consensual, backed up with a promise of consideration, and is executed by 2 parties of legal age and sound mind.
Why Contracts Becomes Invalid
An invalid contract can’t be enforced under laws. Be aware that a void contract is null from the time it was created and neither part is bound by the terms. Usually, it does not contain all the necessary elements; hence, the court doesn’t recognize it.
Some of the reasons why a contract becomes invalid will include impossible terms involved, a party was under the age of consent, the terms are illegal, a party does not have sound mind, and the contract is restricting the rights of a party.
How To Properly Execute A Contract
- Read it very carefully — It is very crucial for you to read through the document completely if you enter into an agreement with someone. This is a must, most especially when the documents are lengthy and include plenty of complex clauses. You can avoid missing any significant information if you take some time to review its contents.
- State the offer clearly
- Fully understand what you are agreeing to by everything you don’t comprehend
- Write it down — Written documents are the best way of proving that an agreement was made
- Accept or deny the offer before it expires
- Know who you are dealing with — Always confirm the identity of the other part prior to signing anything to ensure that they are who they say they are.