There are six recognized elements of an enforceable contract. Of course, as a backgrounder, a contract is a legally binding agreement between two or more parties. It details and recognizes the rights and duties of these parties, particularly the roles and responsibilities they agree to perform, as well as those that they avoid performing.
Regardless of the types or kinds of contracts, their enforceability depends on whether or not it contains all of these six elements. These elements also correspond to the legal requirements of contract formation. Hence, for an agreement to be considered valid and binding, it must satisfy these requirements or include the six fundamental elements.
The Six Elements of an Enforceable Contract
1. Offer and Acceptance
Both parties must express their desire to enter into an agreement. Doing so involves an offer made by an offeror and an acceptance from the part of an offeree.
2. Mutual Agreement
The involved parties must have a clear understanding of the scope and limitations of their agreement. The contract must indicate mutual agreement or so-called meeting of the minds.
3. Consideration
Another one of the elements of an enforceable contract is an exchange of promises or considerations. Each party must agree to give up something or agree to a compromise to demonstrate mutual and equal agreement.
4. Competent Parties
The parties must be competent or mentally and legally capable of understanding what they are doing. Specific elements of competence include mental health status, legal age, and to some degree, socioeconomic background.
5. Legality of Purpose
Laws supersede a contract. The purpose of the agreement must not violate any law. A contract is not valid if it is not aligned with relevant laws.
6. Proper Form
There are different types and forms of contract depending on the jurisdiction. The most common is a written agreement that should follow a prescribed form, contain the necessary components or parts and clauses, and affixed with signatures from involved parties.