Contract – What is it?

A contract, by definition, is a voluntary agreement between two private parties, making mutual legal obligations and supported by considerations. It can be either oral or written. The oral contract, also known as verbal contracts, and it occurred when spoken words were provided. Yet, an oral contract can’t execute legally and accordingly unless it is attestable. On the other hand, written contracts are agreements on a printed document. Written agreements are easy to enforce and are legally binding.

Elements of A Contract

There are different elements to be met for any contract to be in legal binding. These include; offer and acceptance, consideration, capacity and legality. Without these general elements, a contract will not pass through validation.

The first element is offer and acceptance. This element is the basis of a contract. There must be an offer made by one party and to be accepted by the other one. One party must understand that the offer is not like a promise because it must be made with proper comprehension with what is being agreed with.  An offer should not be ambiguous and vague; it must be firm.

On the other hand, an acceptance perceives an unconditional agreement with every term formed in an offer. There must be what is known as “meeting of minds” between the parties. It is straightforward and unreserved, and silence does not mean acceptance.

Moreover, another element in a contract is a consideration. Consideration is based on the idea of “bargain -for exchange”. Meaning, both parties will get something from what they have agreed to, usually something with value. It can be something like money, car, or manual labour.

Another element is the capacity or the legal ability of a person to enter into a valid contract. In this, a person must evaluate if he has the capability to perform legal agreements. And the fundamental element is to have a sound mind before entering a contract. Of course, minors and infants, and people who are under the influence of drugs are not valid.

Besides, contracts must be in writing. Though not all contracts must be in written format, yet most of the time, they are avoidable. All contracts that are written or even handwritten are acceptable.

Contract Classification

Contracts can be bilateral and unilateral.

Bilateral contracts are the most common ones. It is an agreement between two parties or groups. Personal and business contracts fall into this category.

However, a unilateral contract has something to do with a promise in a trade-off for a specific exchange. This type of contract allows only one person to make a promise or an agreement.

The most comfortable distinction of the spot in the middle of the unilateral and bilateral contract is the number of parties making promises-  bilateral contracts are in need at least to parties while the unilateral is requiring only one. In bilateral, the offeror is offering to repay for the other party’s promise before taking action. In unilateral, the offeror is offering to pay for the activity being completed.