The requisite elements that must be established to
demonstrate the formation of a legally binding contract are:
Offer
First, an offer must be extended in order to begin a contract. This
should include details of the agreement and its terms and conditions. Simply
put, the offer is the offeror's attempt at entering into a contract with
another.
Sometimes businesses will look for contractors through an
invitation to treat by letting people know that they are interested in entering
into a contract.
Acceptance
Once the offer is extended, it's in the hands of the offeree to
either accept or reject the proposal and its terms and conditions. Offerees can
accept offers via mail, email, or verbally.
Most states use the mailbox rule meaning that, if an offer is
accepted via mail or email, the moment the acceptance is placed in a mailbox to
be mailed or sent via email, it has officially been accepted. This holds true
even if the offerer never receives the acceptance. Within this acceptance,
there needs to be a clear statement that the terms of the agreement are all
accepted.
Meeting of the Minds
The meeting of the minds in contract law refers to the moment when
both parties have recognized the contract and both agreed to enter into its
obligations. This is also called:
Genuine agreement
Mutual agreement
Mutual assent
Consensus ad idem
Even after the parties have entered into the contract, it can be
voided a few different ways including duress, undue influence, fraud, or
misrepresentation.
Consideration
Something of value must be exchanged in order to have a valid legal
agreement. Usually, things like products, property, protection, or services are
offered for the exchange of money.
If not trading in money at all, the parties should be sure that the
court would view whatever they are trading, also called their consideration, as
valuable.
Capacity
Each party must be fully able or have the legal capacity to enter
into the contract in order for it to be considered valid. For instance, you
cannot enter into a legal contract with a three-year-old. Both parties must be
of their right mind in order to form a contract, so a valid agreement could not
take place if one of the parties is under the influence of any mind-altering
substance.
This also includes the desire of both parties to enter into the
agreement free from coercion.
Legality
Contracts cannot be created to govern the trade of illegal products
or services. A drug dealer cannot enforce a contract with their buyer if their
buyer doesn't pay them.
Each party must show legal intent, meaning that they intend for the
results of their agreement to be completely legal.
