A contract is a document showing that two parties are in agreement on something. Both sides should have the consent to enter into the agreement and below are some of the essentials of a valid contract.
Offer And Acceptance
In any contract, there must be two parties. One party makes the offer, and the other party accepts it. For the offer to be valid, it must meet certain conditions. For example, it should be for legal purposes, and it should be adequately communicated to the other party so that they are fully aware of what they are getting themselves into. Acceptance, on the other hand, must be made in the prescribed manner and it should be made to the offering party before time lapses.
Intention To create Legal Relationship
Both parties must have the intention to create a legal relationship. Social and domestic agreements are exempted from this rule, but in commercial or business agreements, the presumption is that both parties intend to create a legal relationship.
Legal Capacity
According to the law, not everybody has the right to enter into a valid contract. For example, people with mental impairment can’t enter into a valid contract. Minors too are incapable. In most states, minors are individuals who are under the age of 18. People who are bankrupt and prisoners are in that category too. Therefore, before making an offer to a party, ensure that they do not fall under the category of individuals who are not allowed to enter into a contract because it is illegal and the repercussions are severe in most states.
Consideration
This is the price that is paid for the promise of the other party. It should be something of value but not money because that would be considered as a bribe. It could be some right or a good amount of interest that the other party will get once they accept the offer. Note that the consideration should not be illegal or anything that is impossible to perform. However, documents under seal do not require consideration for the signing of the contract.
Legal Formalities
For the contract to be valid, it must comply with the required formalities. The necessities include the writing, stamping, and registration among others. Most states are strict, and if they find out that the contract did not follow the right protocol, it will be terminated, and it is punishable. Both parties should, therefore, familiarize themselves with what is required from them before entering into the agreement.