Elements of a Contract

Understanding a Contract

• Definition: A contract is a legally enforceable promise.
• Breach: If a contract is breached, the law provides remedies.

Elements of a Contract

1. Capacity

   • Age: Person must be of lawful age, typically 18.
   • Mental Capacity: Person must be of sound mind.
   • Authority: For entities like corporations, authority to contract is essential (no concern with age or mental capacity).

2. Offer

   • Defined as a manifestation of willingness to enter a bargain.
   • The offer invites the other party's assent, concluding the bargain if accepted.

3. Acceptance

   • Must be an unconditional willingness to be bound by the offer.
   • Often referred to as a "mirror-image," meaning the acceptance must exactly match the offer.

4. Consideration

   • A promise must be supported by consideration, meaning something is given in return for the promise.

5. Mutual Agreement

   • Also known as "meeting of the minds."
   • Parties must have a clear understanding and agreement on the terms.
   • Example: A misunderstanding about the product or terms can invalidate a contract (e.g., selling a fertile cow presumed sterile).

6. Legality

   • The contract must have a legal purpose and be carried out legally.
   • Example: Illegal transactions, like hiring a hitman, cannot be enforced.

7. Proper Form

   • Contracts can be oral or written.
   • Certain types require writing according to the Statute of Frauds:
     • Real property transactions
     • Contracts not performable within one year
     • Contracts guaranteeing someone else's debt
   • These must be signed by the person making the promise.

Summary

• The essential elements of a contract are: capacity, offer, acceptance, consideration, mutual agreement, legality, and proper form.