Contract Legality: Essential Criteria Keith C. Quarles Ashford University BUS67 : Legal Environ!

ent "#$%&&'6A( #ichael Burton )*& *&&

Abstract +his ,a,er is designed to na!e- e.,lain and descri/e the four essentials that !a0e a contract legal and /inding. 1nternet articles 2ere used to su,,ort rationale and assu!,tions in this ,a,er. +his ,a,er 2ill distinguish an offer fro! an invitation to treat. +he internet articles used dis,lay contract /asic re3uire!ents and detail the four essentials of a contract.

1n order to enter into a legal- /inding contract agree!ent 2e !ust first 0no2 2hat the four essential ingredients are that !a0es a contract valid. +he four essentials of a contract ,rovide not only guidance for creating a valid contract /ut also recourse for litigation involving contract dis,utes. 4er/al- 2ritten- and i!,lied contracts are all held to the standard that is !andated /y contract la2 that re3uires an offer- acce,tance of the offer- consideration and intent of legal conse3uence. $our Essential Ele!ents of a Contract An offer is /asically a declaration to do so!ething for another ,arty. An offerer is the ,erson 2ho !a0es the offer and the offeree is the ,erson 2ho is offered the agree!ent that !ay /e acce,ted. 5ffer $our essentials of a Contract "6 & ( notes that 7there !ust /e a definite- clearly stated offer to do so!ething. E.a!,les of offers can /e a 3uotation /y su/*contractor to the !ain contractor and an offer to lease. ",.&( An offer !ay /e confused 2ith an invitation to treat 2hich is a !ere entice!ent to a ,ossi/le offer an acce,tance of an offer though it !ay advertise the ,otential consideration. An offer is different fro! an invitation to treat. An offer does not include /all ,ar0 esti!atesre3uests for ,ro,osals- e.,ressions of interest- or letters of intent. An offer 2ill la,se 2hen the ti!e for acce,tance e.,ires- if the offer is 2ithdra2n /efore it is acce,ted- or after a reasona/le ti!e in the circu!stances "generally the greater the value of the contract- the longer the life of the offer(. "8e/orah S!ithies 6 7- ,.&( Acce,tance !ay /e desri/ed as 2illing2ess to agree to the ter!s of an offer e.,licitly. Acce,tance 5nly 2hat is offered can /e acce,ted. +his !eans that the offer !ust /e acce,ted e.actly as offered 2ithout conditions. 1f any ne2 ter!s are suggested this is regarded as a counter offer 2hich can /e acce,ted or re9ected. Acce,tance can /e given ver/ally- in 2riting- or inferred /y action 2hich clearly indicates acce,tance ",erfor!ance of the contract(. 1n any case- the acce,tance !ust confor! 2ith the !ethod ,rescri/ed /y the offerer for it to /e effective."$our Essentials of a Contract- 6 & - ,.&( Consideration !ay /e descri/ed as the o/9ective co!,ensation for ,erfor!ance of the ter!s agreed u,on in the contract. Consideration 1n order for a contract to /e /inding it !ust /e su,,orted /y valua/le consideration. +hat is to say- one ,arty ,ro!ises to do so!ething in return for a ,ro!ise fro! the other ,arty to ,rovide a /enefit of value "the consideration(. Consideration is 2hat each ,arty gives to the other as the

agreed ,rice for the other:s ,ro!ises. Usually the consideration is the ,ay!ent of !oney /ut it need not /e; it can /e anything of value including the ,ro!ise not to do so!ething- or to refrain fro! e.ercising so!e right. +he ,ay!ent doesn:t need to /e a fair ,ay!ent. +he courts 2ill not intervene 2here one ,arty has !ade a hard /argain unless fraud- duress or unconsciona/le conduct is involved. . "$our Essentials of a Contract- 6 & - ,.&( 1ntention of legal conse3uence is a rather a/stract ter! that re3uires /oth ,arties to a contract to ac0no2ledge and reali<e that the contract is legally enforcea/le as a ,re!ise to entering the agree!ent. 1ntention of legal conse3uences A contract re3uires that the ,arties intend to enter into a legally /inding agree!ent. +hat is- the ,arties entering into the contract !ust intend to create legal relations and !ust understand that the agree!ent can /e enforced /y la2. +he intention to create legal relations is ,resu!ed- so the contract doesn:t have to e.,ressly state that you understand and intend legal conse3uences to follo2.1f the ,arties to a contract decide not to /e legally /ound- this !ust /e clearly stated in the contract for it not to /e legally enforcea/le. "$our Essentials of a Contract- 6 & - ,.&( Conclusion 1n so!e cases- the ter!s of a contract !ay /e a!/igious and conse3uently defined in a court of la2 through litigation. +he four essentials of a contract ,rovide not only guidance for creating a valid contract /ut also recourse for litigation involving contract dis,utes. 4er/al- 2ritten- and i!,lied contracts are all held to the standard that is !andated /y contract la2- 2hich re3uires an offer- acce,tance of the offer- consideration and intent of legal conse3uence in order to /e legally enforcea/le.

=eferences S!all Business 8evelo,!ent Cor,oration- "6 & (. $our Essentials of a Contract. =etrieved on )* 6*&& fro! htt,:>>222.s!all/usiness.2a.gov.au>four*essential*ele!ents*of*a*contract> S!ithies- 8. "6 7(. Contract: Ele!ents of a Contract. =etrieved on )* 6*&& fro! htt,:>>tutor6u.net>la2>noted>contract*ele!ents.ht!l