Essential elements of a contract and legal considerations

¶ … Contract

Several elements determine the enforceability and validity of a contract. Similarly, several elements can cancel an agreement between two or more parties and/or void a contract. To determine what makes a contract enforceable, and how to legally get out of a contract, it is important to understand the components of a contract.

Regardless of the type of contract, all contracts are made up of six different legal elements including offer, acceptance, objective, mutuality of obligation, consideration, and the requirement that all parties entering into the contract are competent (Cross, 2007). When dealing with contracts, the offer can be defined as "an expression of willingness to contract on certain terms, made with the intention that [the contract] shall become binding as soon as it is accepted by the person to whom it is addressed" (Trietel 2007). Acceptance of a contract requires that all parties agree on identical terms, however, rejection of any or all parts of a contract will allow for a counter-offer to be made. The terms that have been defined in both the offer and acceptance are restricted to the parties that entered into the original contract and the terms are not transferrable.

The objective of a contract is must be determined for legal reasons. A contract that contains any illegal terms or conditions cannot and is not enforceable by law. The mutuality of agreement between contractual parties is the determination that the parties are in "mutual agreement" and that they are willing to "assent to the expression of their argument" (Legal Elements of a Contract, n.d.). Consideration determines and establishes the terms and agreements that are being made between contractual parties. Moreover, in order to ensure the validity of a contract, the parties that are entering into said contract must be of sound mind and judgment; incompetency can be used as a legal defense to a contract (Legal Elements of a Contract, n.d.).

Defenses to a contract, or ways a contract can be legally voided, include incapacity, mistake, duress, undue influence, unconscionability, and misrepresentation or fraud. If a person enters into a contract when they are ill, intoxicated, or mentally unstable, a contract can be found to be unenforceable if it can be proven that the parties entering into the contract were not of sound mind or judgment. If mistakes are found within a contract, the contract can also be considered to be unenforceable, however, if any of the parties knowingly enter into a contract that has mistakes, then the "knowledge of the mistake will be imputed to each party" (Breach of Contract: Defenses, 2010). If a party was coerced or pressured into entering a contract, then duress can be claimed; duress includes extortion, physical violence, threats, and/or show of force. Undue influence is when "one party exercises such control over a second party as to overcome the independent judgment and free will of the second party" (Breach of Contract: Defenses, 2010). Unconscionability happens when contractual terms and conditions are deemed to be a violation of public policy and are considered to "offend the court's sense of fairness" (Breach of Contract: Defenses, 2010). Fraud and/or misrepresentation take place when one party intentionally seeks to deceive the other contractual party; fraud requires that willfull misrepresentation or the concealment of material facts to occur (Breach of Contract: Defenses, 2010).

Contracts can be legally voided through revocation, rejection, counter-offer, and/or full-performance. Other forms of legally voiding a contract include the lapse of time, an exceedence of a contract's statue of limitations, destruction, death, or incompetence and/or illegality. In these cases, the courts do not have to get involved in the dissolution of a contract.