Countless numbers of contracts are made each day between various parties. One party often believes that he or she can get out of the contract because the contract was not valid. People may, however, be entering into valid contracts without realizing it and may be liable to the other party. This article discusses the three requirements to a valid contract. If these requirements are met, you are a party to a valid contract and are legally obligated to uphold your end of the deal.
An offer must be made in order to form a valid contract. An offer is a promise, action, or commitment made by one person that demonstrates that that person wants to enter into a contract. This offer can be written or oral.
Offers must also be stated in specific and certain terms. Each party should come away from the communication knowing exactly what is expected of him or her and what he or she will receive in return. If offer terms are vague or ambiguous, the contract may not be valid. Offers must also be communicated to a person who can accept the offer and who the person making the offer intends to make the offer to.
An offer must be accepted to form a valid contract. Acceptance of an offer can occur in a number of ways. The person who has received the offer may simply verbally accept the offer by promising to perform his or her end of the deal. The person who has received the offer may also either start to perform or fully perform the request of an offer. For example, if someone says to you, “I will give you $10 if you clean my car” and then you start to clean the car or complete cleaning the car, you have accepted the offer.
Each valid contract must be supported by consideration to be valid. Consideration is a bargained for exchange of either legal detriment or legal benefit. In easier terms, consideration is present when a person either does something he or she does not have to do or forbears from doing something that he or she has a legal right to do.
For example, a promise to clean a car is supported by consideration because people do not have to clean cars. Additionally, a promise to quit smoking is supported by consideration because people have a right to smoke. Either of these examples, and many more, meet the requirement of consideration.
Offer + Acceptance + Consideration = Valid Contract
If all of the above requirements have been met, you have a valid contract. This means that either party could sue to enforce that contract. Be careful in your interactions with others. Too many people believe that contracts have to be formal and in writing to be enforceable. That is simply not true.