Basic Elements Of A Contract Essays

1277 Words Nov 30th, 2014 6 Pages
1. Describe the basic elements of a contract
There are four basic elements to a contract. These include the offer and acceptance of a contract, lawful consideration, competent parties, and lawful purposes. Each of these elements must be present to be considered a contract. First, contracts must be entered into for lawful purposes. That is they may not run afoul of state/federal laws or public policy. For example, a contract for distribution of liquor to minors is not binding as the purpose of the contract is illegal.
Next, for offer and acceptance to be present, there must be a definite clearly stated offer to engage in some type of activity. It indicates a readiness to do something. An offer may be verbal, in writing or implied. Acceptance indicates that the person or entity to whom the offer was made has accepted without conditions.
Lawful consideration refers to the benefit to one party or a detriment to the other. More succinctly, each party must give something of value to get something of value (Pozgar, 2012). It is something for which is bargained that is exchange for a promise of some sort. While consideration often comes down to money, it is not always the case. Consideration may come in the form of rights, benefits, responsibility or some other quid pro quo arrangement.
The competent parties’ element requires that anyone who enters into a contract relationship be legally competent. Consequently, persons with diminished mental capabilities or…

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