Introduction
When parties enter into a legally binding agreement, they are said to have entered into a contract. One distinctive element of a contract is that it can be legally enforced and should meet the threshold requirements for prevailing law. The document stipulates the obligations and duties of all the parties. For an agreement to be termed a contract, it must contain essential elements: offer, acceptance, consideration, and parties must have the capacity to engage in a contract.
Offer
A party is said to have made an offer when they make an expression of interest to enter into a contract under specific terms and that this expression will be legally binding when accepted. The party to whom the offer is made is called the offeree, and the party making the offer is called the offeror. An example of an offer situation is an athlete negotiating with their team, and they want to continue to play for the team and therefore receive a contract extension offer. The athlete is not obligated to accept the terms and should not be coerced into agreeing.
Acceptance
This element of the contract is as intuitive and self-explanatory as it gets. An offeree indicates their willingness to abide by the terms and conditions stipulated in the contract offer. Generally, an invitation for acceptance could be by reasonable means acceptable under the circumstances unless there is language explicitly indicating otherwise. Silence is not ‘acceptance’ unless the contract indicates so or the offeree has reaped some benefit from the offeror or that previous dealings provide that the offeree makes a response. The above example of an athlete getting the extension offer only becomes legally binding if they append a signature to the document.
Consideration
Another essential element in contract law is ‘consideration ’; it refers to the inducement offered to enter into a contract sufficient to make the promise enforceable. It is a detriment to the person making the promise or a benefit to the opposite party. The party that seeks to enforce a pledge should have bound themselves to pay, paid, provided goods and services, or foregone a legal right or profit. An example of consideration is in the sale of a car; the buyer pays the selling price as consideration to the seller. At the same time, the vehicle is a consideration to the buyer.
Capacity to Contract
Capacity in contract law refers to the ability to enter a contract. It pertains to characteristics of the potential parties, such as age, mental soundness, and sobriety from drugs. In this regard, minors, persons intoxicated from drugs, or those mentally ill cannot enter a contract. If such persons sign an agreement to accept an offer, it automatically voids the contract, making it unenforceable. Having capacity means that a party has the competency to engage legally. An example of this is an inheritance for minors being held in trust until they are old enough to manage it themselves.
Conclusion
Contracts are an essential part of modern civilizations, and without them, the world would run into turmoil. Contracts have existed for a long time throughout history, but contract law was refined under various jurisprudence in Europe. For a contract to be legally enforceable, it must contain certain elements such as an offer, an acceptance, and consideration. Moreover, the parties entering the contract must have the capacity to enter a contract without which the contract is null and void.