Elements of a Contract

The five elements of an enforceable contract are the offer and the acceptance, consideration, intention to create legal relations, consent and legal capacity. Any contract that lacks any of the above elements is not enforceable.  An enforceable contract carries the force of the law behind it. It is an agreement between two parties that is legally binding. Usually, an enforceable contract is not restricted by any laws and the parties are bound to fulfill its terms.

A contract is formed when one party makes an offer and the other accepts it (Davies, 1986). The offer must be specific. It can be made to a person or a group of people. An offer shows a party’s intention to be bound by the terms of a contract provided the contract is accepted. The acceptance on the other hand must be exact. If A makes an offer to B to sell him a white car, and B accepts to buy the car on condition that it is painted green, then he has not accepted the offer given by A. Provided the offer has not been accepted, one can withdraw his offer.

The intention to create legal relations occurs when the two parties accept to enter into an agreement that is legally binding (Farnsworth, 1970). While the contract rarely states this expressly, the conditions under which the agreement was made makes this clear. Commercial contracts usually contain a clause that show that the contract was meant to be legally binding. It is applied if any of the two parties fails to honor his part of the contract.

Consideration is the price paid by one party for the other party’s promise. It must be something of value but need not be money. Provided that the consideration exists, the court may not question its sufficiency. In other words, it does not matter what the value of the consideration is provided it is provided.

For a contract to be enforceable, the parties must be of legal capacity. People who are not of legal capacity include children and mentally impaired patients. A bankruptcy may also be used to make a contract unenforceable. Corporations on the other hand are legal entities on their own. The individuals who sign the contract are therefore not bound by the contract but instead the corporation is.

Consent must be present for a contract to be valid. If a contract is made by two willing parties who completely understand the contents of the contract, then it may be legally binding. Otherwise, the contract is not enforceable.

I once had a rental agreement. We signed the contract and agreed to pay a certain amount of money at the end of every month. Failure to do this would lead to an eviction. On his part, the landlord would ensure that the house was properly cared for and that there was always water available for which he would have to pay the local council.

In this contract, the landlord and I were the two parties of the contract. The offer was the Landlord’s intention to rent the house at the said amount. I accepted the offer to pay the specified amount every end of the month. The consideration is the amount of money I gave to the landlord each month. Since both of us understood and accepted the terms of the contract without force, there was consent. In this case, the contract was also a commercial contract and was mean to be legally binding. The rebuttal required that if I did not care to pay my side of the deal, I would be evicted. Since we were both adults of stable mental capacity, we were both of legal capacity. We were also intent to create legal relations. I was willing to enter into this contract since I needed a house to live in. I also wanted him to honor his side of the bargain and pay for the services he offered to pay in the contract.

We both honored our parts of the contract. I paid the rent in time and there was water and the house always cared for. However, sometimes he could not do anything about the water. Once the water pipe was broken by the road constructors and he would not give us water. While we had an option of not paying rent, we understood the situation and waited for the water pipes to be repaired.

In conclusion, for a contract to be enforceable there must be all five elements of the contract. First, there must be an offer and an acceptance (Farnsworth, 1970). One party makes an offer which is accepted by the other. Second, there must be a consideration or a valuable item that is given by the accepting party in return for the offer. The parties should also be willing to enter into legal relations. Willingness to enter into legal relations is either shown by adherence to the agreement or by signing the agreement. The two parties must also have consent be of legal capacity.

References

Davies, F. (1986). Contract (1st ed.). London: Sweet & Maxwell.

Farnsworth, E. (1970). Legal remedies for breach of contract. Columbia Law Review, 1145–1216.

Fehr, E., & Zehnder, C. (2009). Reputation and credit market formation: How relational incentives and legal contract enforcement interact.

Kessler, F. (1943). Contracts of Adhesion–Some Thoughts About Freedom of Contract. Colum. L. Rev., 43, 629.

Robinson, S., & Rousseau, D. (1994). Violating the psychological contract: Not the exception but the norm. Journal Of Organizational Behavior, 15(3), 245–259.