Elements of a Legally Enforceable Sales Contract

Valid contracts are legally enforceable agreements or promises between two parties. These contracts help to solidify business transactions between individuals, sole proprietors or corporations. The Uniform Commercial Code and state common law govern the sale of goods. Small businesses involved in sales contract disputes can look to these two sources to determine if the proper contract elements are included to make the sales contract legally enforceable. These legal agreements also must be made voluntarily by those with contractual capacity. In other words, the contracting parties can not be minors, intoxicated or mentally incapacitated.

In the formation of a sales contract, the first requirement is that one party must make an offer. An offer exists when one party clearly expresses the willingness to enter into a contractual relationship that is bound by a specific set of terms. The offer also must made in such a way that it can be easily accepted by the person receiving the offer -- without him doing anything further aside from accepting the offer.

An acceptance is no more than its dictionary definition. The party must agree to receive something. A binding contract results if the acceptance of the offer is clear and absolute, without any conditions attached. The party accepting the offer cannot substantially change any of the terms and conditions of the offer. The offer also must be accepted before it expires. If there is no time limit specified with the offer, then it must be accepted within a reasonable amount of time. What is reasonable is determined by the circumstances of each case.

Sales contracts are only binding if they possess consideration or both sides give something of value. The small business making the offer gains a benefit, and the other party accepting the offer gives a corresponding cost. The consideration need not be adequate. The law merely requires that it is sufficient; the party must simply give something of value as a result of the offer.

Sales contracts also must comply with the Statute of Frauds under the UCC, which requires that certain types of contracts be in writing in order for them to be enforceable. If the value of the goods involved in the contract is over $500, then a writing of the transaction must exist. UCC section 2-201 has increased the contract threshold to $5,000, but as of the date of publication no state has adopted that new threshold. The sales contract does not have to be in writing, but there must be a written documentation of the agreement. Even a sales receipt would fall under this category.