The 4 Necessary Elements of a Contract

Understanding the ins and outs of entering into a contract is imperative, as contracts are legally binding agreements between two or more entities or persons which is enforceable in a court of law or in equity. Contracts are complex by nature and therefore require absolute attention to detail. As a result, contraction formation should never been done without consulting an experienced attorney. It is critical to speak with an attorney prior to entering into contract negotiations and before executing a contract. Nevertheless, having a sound understanding of a contract is important for any person.

The parties of a contract are the offeror whom is making the offer and the offeree who is the individual to whom the offer is made. There are 4 necessary requirements for a valid contract and they are as follows:

1. Offer and Acceptance: both the offer and acceptance are essential, as both equate to an agreement.
2. Consideration: this is critical as it distinguishes the difference between a contract and a gift. A consideration is a legally sufficient bargained-for-exchange. This can be tricky as things like moral obligations, gift promises, and past consideration are considered insufficient consideration.
3. Capacity to Enter into Contract: people such as intoxicated individuals, minors, or those deemed insane may not have the necessary capacity to understand the nature of the transaction that they are entering into.
4. Lawful Object: a contract cannot be enforced if the object is considered to be against public policy or illegal. As such, state laws are important here as certain objects are considered lawful or unlawful depending upon the particular jurisdiction.

Each of the above elements are important in the formation, negotiation, and execution of a contract. If you are unsure of a contract you are entering, it is very important to speak with a contract attorney to make an informed decision. The Law Office of Brenda Murzyn, P.C. prepared to handle all of your contract needs. Contact our Naperville, Illinois contract law department today to learn more!