Question

The essential elements of a valid contract is/ are_____.

• A. Offer & acceptance
• B. Two parties
• C. Intention to create legal relationship
• D. All of the above

Answer 1

Answer: (D)

All of the above

There are six basic requirements in a legally enforceable contract:

An offer

An acceptance

Competent parties who have the legal capacity to contract

Lawful subject matter

Mutuality of obligation

Consideration

Offer

An offer is an expression of willingness by one party to contract on certain terms with another party with the understanding that the contract will become binding when accepted by the person to whom it is offered. An offer may be made in different ways, such as in a letter, an email, or even your behavior, so long as it conveys the basis on which the offering party is willing to contract. An offer should consist of: (1) a statement of present intent by the offering party to enter into a contract; (2) a specific proposal that is certain in its terms; and (3) a communication that identifies the person to whom the offer is made. If any of these elements are not present, an offer has not been made.

Acceptance

Acceptance is a final and unqualified expression of consent to the terms of an offer. An offer may only be accepted by the person to whom it is made unless an agent is authorized to accept on behalf of that person. In addition, an acceptance must be made in the manner requested or authorized by the offering party. If the party to whom the offer is made changes the terms of the offer, he or she has rejected the initial offer and has made a counteroffer that may or may not be accepted by the other party.

Competent Parties

Parties to a contract must be competent to enter into a contract. In general, most individuals are deemed to have the capacity to contract unless the person is a minor, incompetent or insane, or drunk or drugged when entering into the contract.

Lawful Subject Matter

In order for a contract to be enforceable, its subject matter cannot be prohibited by law or violate public policy. For example, a contract for the sale of illegal drugs is not enforceable, and a person cannot promise to transfer clear title to real estate if the property is encumbered by a lien or mortgage.