ELEMENTS OF A VALID CONTRACT

Competent Parties

A Contract is not valid unless it is made between two parties who are considered competent under the law. In most cases, a person who is a minor, insane, or under the influence of alcohol or drugs is considered incompetent.

Legal Purpose

The second requirement for a valid contract is that it be formed for a legal purpose .A contract that is against public police ( offensive to the best interests of the public ) or in violation of the law is not enforceable.

Offer and Acceptance

The third element of a valid contract, OFFER AND ACCEPTANCE ,means that the contract involves two parties ; one who makes an offer and one who accepts it.

Offer and Acceptance

This is also called AGREEMENT. An offer is a promise that requires an act or another promise in exchange. Acceptance occurs when the other party agrees to the offer or does what was proposed in the offer.

Characteristics are

competent parties; legal purpose ; offer and acceptance ( agreement ) ; and Consideration

A Contract

is a legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration

Consideration

The last requirement for a valid contract is that it involve consideration. Consideration is a thing of value exchange for the performance promised in the contract With insurance,the consideration that the insured gives is the premium payment. The consideration that the insurer gives is the promise to pay for certain losses suffered by the insured