What Are the Four Elements That Make a Contract Legally Binding and Enforceable?

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Mutual Assent

A contract must always have mutual assent to be binding. Mutual assent requires the involved parties to mutually agree on the terms of the contract. Once agreed, one party provides an offer and the other party accepts the offer under the mutually defined terms. This "offer" and "acceptance" is often referred to as the "meeting of the minds."

Legality

Enforceable contracts are only those which involve legal activities within the scope of the law. Contracts that involve or enforce illegal activities are neither binding nor enforceable in court. The contract's jurisdiction is an important aspect, as the legal parameters can change based on locality.

Consideration

A binding contract must deliver one form of consideration for another form (Cornell University). The consideration, in a contract, is the object of value that is being exchange. The consideration can be tangible or intangible and varying price and size. Common forms of consideration include real estate, personal property and services.

Capactiy

In order for a contract to be enforceable, the parties of the contract must have the capacity, or ability, to complete their obligations as outlined within the contract. Minor children, under most circumstances, do not have the capacity to make binding contracts because of their age. The competent parties must not only be of legal age, the parties must be mentally sound when entering into the agreement.

Statute of Frauds

The Statute of Frauds is designed to protect the integrity of certain contracts. Under the Statute of Frauds, contracts must be completed in writing when the agreement involves the sale or transfer of real estate, debt or obligation of another, or the sale of certain goods as outlined by the applicable Uniform Commercial Code. Contracts that cannot be completed within a one year period must also be written, under the Statute of Frauds. These written contracts must detail the contract's parties, subject matter, terms, conditions and signature of the party who is being charged for the exchange (Expert Law).

References

About the Author

Writing professionally since 2004, Charmayne Smith focuses on corporate materials such as training manuals, business plans, grant applications and technical manuals. Smith's articles have appeared in the "Houston Chronicle" and on various websites, drawing on her extensive experience in corporate management and property/casualty insurance.

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