A contract is an agreement between two parties requiring them of a legal obligation to fulfill the terms and conditions stated. Contracts are made for various reasons. It can be for purchase of land, property, product, or service. It can also be for marriage and employment.
Federal and state law has delineated specific elements to determine the validity and existence of a contract. The court also reviews issues that may nullify or void the contract. Should a breach is discovered; the court orders damages or rescission.
There are elements that directly affect the legality of a contract with corresponding damages for failure to fulfill obligations. A contract has three vital elements: Offer, acceptance, and consideration.
There should be a verbal proposal or a written statement expressing the intention to commit or be liable in an agreement. It is referred to as an offer. An offer can be validated through a careful examination of the following:
a. Sincerity- The individual making an offer should be serious enough in entering a contract.
b. Accountability- The person should display responsibility and reliability in fulfilling the terms and conditions in the contract.
c. Adequate information- The offer must contain delineated information on the subject matter, parties involved, summary of conditions/price/quantities and time/duration. The offer must also state that the court can enforce the terms in contract or implement the damages.
The offer must receive amiable response from the other party. This is referred to as acceptance. Response to an offer should be made within the specified period. There are situations in which the offer can elapse, such as:
1. The individual initiating the offer withdraws
2. The other party rejects the offer
3. The time allotment for responding to the offer has ended
4. The subject matter has been destroyed
The other party can also request changes in the conditions stated in the offer. In this case, the person who initiates the offer will make a new one. This is referred to as counteroffer. The other party can respond to the offer in two ways: promise to do or not do something (bilateral contract) or execute the actual act (unilateral contract).
Either of the two parties gives something of value for the promise to enter a contract or for the execution of obligations. It is referred to as consideration. It can be goods, money, service, assurance of loyalty and confidentiality. Consideration is a legal responsibility and the involved parties must fulfill this exchange.
Learn more on the overview of defenses for contract, contract termination, and damages. Consult with a Business litigation lawyer today.