To create a legally binding contract form, the document must typically include terms that show the parties to the transaction have come to an agreement and exchanged something of value. The contract form can contain other terms the parties choose to include, but these two basic elements make the contract enforceable under the law.Continue Reading
Parties come to an agreement by one party making an offer and another party accepting the offer. The parties must agree on the same thing in the same sense, otherwise the transaction lacks the "meeting of the minds" the law requires for an enforceable contract. For example, if a person thinks he is buying a used car to drive but the seller is actually selling a miniature model car for display, no contract forms. Even if the parties negotiate all terms, the people involved were thinking about two different items, so the minds of the parties never met in the basic agreement needed to form a contract.
The contract form must also demonstrate that each party to the transaction gained something of value, called consideration. Valid consideration can take a number of forms, including cash, services or goods. It can also include the promise to exchange such an item in the future or the promise not to engage in an activity.Learn more about Business Communications