Whether the contract contains many pages of details or just a few lines of text, all contracts must have the same basic elements to be legally binding and enforceable. Both verbal and written contracts must involve a mutual agreement between parties and involve only legal activities with achievable terms. Contracts that do not contain the required elements are void in court and not enforceable.
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."
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.
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.
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).
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