Knowledge of the elements of a contract can help avoid contract disputes down the road, as well as help business owners and parties to a contract when a contract dispute has come up. Contract disputes can be time-consuming and costly for business owners which is why familiarity contract law can help.
Elements of a valid contract
In general, contracts are used to memorialize an agreement between parties to the contract that outlines their rights and obligations to one another. A contract breach can occur when one of the parties fails to comply with their obligations under the contract. The elements of a contract are:
- Offer: the first element of a contract is an offer for a good or service.
- Acceptance: the second element of a contract is acceptance of the offer. The acceptance of the offer must mirror the offer which demonstrates a meeting of the minds between the contracting parties.
- Capacity, intention and undue influence: the contracting parties must have capacity to enter into a contract which typically requires that the parties are over the age of 18. In addition, they must have the intent to enter into a contract which includes that there was no undue influence, coercion or duress in the formation of the contract.
- Legality: the subject matter of the contract must be legal, otherwise the contract may be voided for illegality.
Contract disputes can arise in a variety of different situations. Damages for a breach of contract can include compensatory damages, or monetary damages to compensate the non-breaching party for the breach; rescission of the contract, or tearing it up; specific performance of the contract, or requiring that the parties perform the contract; and other types of damages depending on the situation.
