Commercial Transactions and the elements of a legal binding contract

Essay by OhCollegeGuy74University, Bachelor'sA+, August 2007

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There are four requirements which constitute what is generally referred to as the elements of a legally binding contract. If only one of the four elements is not present, a legal bond is not able to be created. Listed below are the four elements of a valid contract;(1) Agreement: An agreement to shape a contract requires that it contain both an offer and an acceptance. This means that one party must proposition the entrance into a lawful contract; the other party must agree to the conditions and circumstances surrounding the offer.

(2) Consideration: Simply means that any covenant or promises that are made by the parties are required to be supported by legally sufficient and bargained-for consideration. Pledges of gifts or ethical duties are not cogitated to be supported by valid consideration, something of worth such as currency; however is.

(3) Contractual Capacity: The parties are required to obtain contractual capacity.

This refers to persons who are intoxicated, senile, insane, or a minor does not attain the contractual capacity required to ingress into an agreement or contract.

(4) Lawful Object: It is required that the purpose or object of the agreement must be legal. Contracts which go against public policy or that are aimed to achieve illegal activities are void. The intention of the agreement must be to achieve an objective which is lawful and not in opposition to public policy.

Parties will on occasion declare that they did not mean to create an agreement which would be legally binding, and therefore should not be bound to the contract. The element of intent is of major significance when it comes to deciding if an agreement has or has not been created; it is not the party's personal intention in which a court considers when deciding the matter. In contract law,