What Are the Elements of an Enforceable Contract?
Ensuring that Your Business Agreements are Valid
When you’re running a business, the agreements you enter into are crucial to your bottom line and to the ultimate success of your enterprise. You should always work with an experienced business law attorney, so that you know that any contract to which you are a party protects your rights and is enforceable in a court of law, should another party fail to abide by its terms. To pass muster with the courts, a contract must meet five basic requirements.
There Must Be an Agreement
At its most fundamental level, this means that there must be at least two parties to a contract. More specifically, from a legal perspective, it means there must be an offer and there must be acceptance of that offer. We will go into more detail about what constitutes a valid offer and a valid acceptance in a subsequent blog, but here are some basics:
- With a few exceptions, an offer and acceptance may be verbal
- While the offer and the acceptance are typically promises to perform, there are certain types of agreements where the actual performance functions as acceptance
There Must Be Consideration
In this context, “consideration” is a legal term that means that each party must either give something of value or refrain from doing something that he or she has a legal right to do. For example, there would be consideration if a 22-year-old promised to refrain from drinking in exchange for some benefit, but the same would not apply to a 19-year-old.
There Must Be Volition
The parties to the agreement must voluntary enter into it. This means that there must not be evidence of fraud or misrepresentation, undue influence or duress.
The Parties Must Have the Legal Capacity to Enter into a Contract
A contract will not be enforceable if one of the parties did not have the legal or mental capacity to understand that he or she was entering into a valid agreement, or to understand its terms. A person may lack capacity because of age (minors generally cannot be held to the terms of an agreement), intoxication or mental infirmity.
The Subject Matter of the Contract Must Be Legal
The courts will typically not enforce contracts to perform acts that violate law or public policy.
At MCIS Law, PLLC, in Stafford, we aggressively advocate for businesses and individuals in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at 925-783-4038. We accept all major credit cards.