Elements of a Valid Contract

What is a legally competent party?

A party who has the legal and mental capacity to enter into a contract

True or False A minor who enters into a contract to purchase real estate has contractual ability.

False

An offer without acceptance is dead air. An acceptance without an offer is presumptuous, and no one can be held responsible for not meeting the terms of a non-existent offer. A form of offer and acceptance is one person asking, "Will you marry me?" and the other person answering, "Yes." Ever hear of breach of promise? That concept was the basis for a law that used to be on every state's books. The one doing the offering (proposing) could get in some serious legal trouble if the answer were affirmative and then the proposer reneged. Some states, such as Hawaii and South Carolina, still have a version of this on their books when the one doing the accepting suffers emotional distress from the breach. The offer alone isn't enough to get you into trouble; the acceptance alone isn't, either. But once offer and acceptance have both been made, a contractual agreement has been formed between the parties.

An offer without acceptance is dead air. An acceptance without an offer is presumptuous, and no one can be held responsible for not meeting the terms of a non-existent offer. A form of offer and acceptance is one person asking, "Will you marry me?" and the other person answering, "Yes." Ever hear of breach of promise? That concept was the basis for a law that used to be on every state's books. The one doing the offering (proposing) could get in some serious legal trouble if the answer were affirmative and then the proposer reneged. Some states, such as Hawaii and South Carolina, still have a version of this on their books when the one doing the accepting suffers emotional distress from the breach. The offer alone isn't enough to get you into trouble; the acceptance alone isn't, either. But once offer and acceptance have both been made, a contractual agreement has been formed between the parties.

What does legal purpose mean?

Contracts must be written for a lawful objective.

Five elements are required for a valid contract: Legally competent parties Offer and acceptance Consent Legal purpose Consideration For certain transactions, such as the sale of real property, the statute of frauds adds a sixth essential element to ensure the contract is enforceable: The agreement must be in writing and it must contain the parties' signatures. The good news is, these required contractual elements are consistent from region to region and state to state. So although state laws differ on many points, they agree on contract law. Your 'Essential Contract Elements' resource summarizes the five elements we've just introduced. Go ahead and read through it. It'll help you understand what's coming up next.

Five elements are required for a valid contract: Legally competent parties Offer and acceptance Consent Legal purpose Consideration For certain transactions, such as the sale of real property, the statute of frauds adds a sixth essential element to ensure the contract is enforceable: The agreement must be in writing and it must contain the parties' signatures. The good news is, these required contractual elements are consistent from region to region and state to state. So although state laws differ on many points, they agree on contract law. Your 'Essential Contract Elements' resource summarizes the five elements we've just introduced. Go ahead and read through it. It'll help you understand what's coming up next.

What are the five essential elements of a valid real estate contract?

Offer and acceptance Consideration Legally competent parties Legal purpose Consent

Rob offered to purchase Laura's house, and Laura agreed to sell it. Each of them was fully aware of the terms, and although there was an initial counter-offer from Laura on price, they eventually reached agreement on all terms and signed a contract. However, if Rob had rejected Laura's counter-offer, there would've been no offer and acceptance, and therefore there would be no contract.

Rob offered to purchase Laura's house, and Laura agreed to sell it. Each of them was fully aware of the terms, and although there was an initial counter-offer from Laura on price, they eventually reached agreement on all terms and signed a contract. However, if Rob had rejected Laura's counter-offer, there would've been no offer and acceptance, and therefore there would be no contract.

What's consideration with regard to a contract?

Something of value is given in exchange for something of value.

In a real estate transaction, which three of the following are examples of consideration?

The seller's promise to sell the property to the buyer The seller's commitment to transfer the property to the new owner The property itself

True or False If a party doesn't have legal capacity and enters into a contract anyway, the contract is voidable by the party lacking the capacity.

True

True or False The minor who enters into a contract with an adult to purchase real estate may hold the adult to the contract, but the adult can't legally hold the minor to the contract.

True

Which of these statements describes the essential element of offer and acceptance? There are two correct answers. Two parties enter into an agreement with full understanding of contract terms. Jim makes an offer on a property with specific terms. Angel accepts it without reading through the terms. A real estate broker offers to represent a client in a sales transaction. They discuss the terms of the agreement and the client accepts. A buyer makes an offer to a seller, and the seller makes a counter offer.

Two parties enter into an agreement with full understanding of contract terms. A real estate broker offers to represent a client in a sales transaction. They discuss the terms of the agreement and the client accepts.

A contract for an illegal purpose is ______.

Void

While the term "consideration" most frequently means careful thought, in contract speak, the word means something of value. It needn't be monetary, however. In fact, gift deeds may be written for "consideration of love and affection." Consideration is an essential element in a contract. It shows intent and solidifies the understanding between the parties.

While the term "consideration" most frequently means careful thought, in contract speak, the word means something of value. It needn't be monetary, however. In fact, gift deeds may be written for "consideration of love and affection." Consideration is an essential element in a contract. It shows intent and solidifies the understanding between the parties.

Your average gangster movie notwithstanding, contracts require a legal purpose to be enforceable. This is an essential element of a valid contract—that the result of its fulfillment is legal. Therefore, you can't sue someone who fails to sell drugs for you. (You really shouldn't threaten to break their legs, either.)

Your average gangster movie notwithstanding, contracts require a legal purpose to be enforceable. This is an essential element of a valid contract—that the result of its fulfillment is legal. Therefore, you can't sue someone who fails to sell drugs for you. (You really shouldn't threaten to break their legs, either.)