Contracts are an essential part of our everyday lives. In fact, we often enter contracts mindlessly and do not register the fact that we entering into an agreement but what constitutes a contract? What does a contract consist of? This post will explain the five elements of a contract to help you better understand how to protect yourself.
Elements of a contract
1. Agreement. The parties must reach an agreement which is established by the fact that there is an offer and acceptance of the offer. This means one party makes an offer and the other party accepts it. The offer and acceptance portion of the contract should have all the important terms included as this will allow the court to enforce the contract if it falls through. The terms can be in expressed or implied form, but express is generally better as it can help avoid confusion and establish your case before a court in light of a violation. The agreement acts as an unconditional willingness to be bound to the terms if the terms are honoured.
2. Legally Bound. Both parties must intend to be legally bound. If one party had no intention of actually following through with the contract and you can establish this in court the contract becomes void.
3. Valuable consideration. Both parties must contribute valuable consideration ie. a payment, an act, a promise to pay/act. An example of this is when you have someone perform home renovations, you pay them (payment) and in return they repair the home (act).
4. Legal Capacity. Both parties must have the legal capacity to enter a contract. Examples of when an individual does not possess the legal capacity:
1. they are drunk
2. under the influence of a drug known to impact your ability to make informed decisions
3. a child
4. someone suffering from mental illness
An example of this case would be if you’re in a bar with your friend who is heavily drunk. You make a bet with your friend and want their BMW if you win; your friend agrees. Your friend loses the bet and you make them sign a napkin “agreeing” to the terms of the bet. Since the individual did not have the mental capacity to make the decision, the contract is void. Good luck trying to fight that battle in court!
5. Preserve legal formalities. Some contracts require legal formalities in order to be binding. Accordingly, you must follow the necessary criteria to ensure that the contract is valid. For instance, some contract such as marriage contracts, cohabitation agreements and separation agreements must be in writing in order to be binding.
If you believe the terms of your contract have been violated, you can contact a paralegal to help you fight for your legal rights. Paralegals can represent clients in Small Claims Court for matters going up to $25,000. A paralegal can also advise you about your chances of success in court and if the case is worth pursuing.
Please keep in mind that each case is unique and will not result in the same outcome. This post does not constitute legal advice. If you have further questions or seek clarification please feel free to send The Social Paralegal a personal message via the Facebook page. https://www.facebook.com/thesocialparalegal
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