What are the Top Contract Features?
A contract is a spoken or written agreement, especially concerning sales, employment, or tenancy, and is enforceable by law. It entails the transfer of policies, goods, and money. Contracts are an essential part of a business, and it is advisable to know its different features before signing one.
A good contract must;
- Ascertain in its terms
- Have acceptance and an offer
- Aim to create a legal relationship.
Contract failure is rare, and it depends on the used contract. Remember, most contracts are bilateral, meaning they can involve more than one party Contract contents differ based on the raised matter. Click www.contractsafe.com for more details.
Elements of a Contract
The top elements of a contract are;
1. Capacity
Contractual capacity or contractual competence is the ability of an individual to actualize an enforceable contract. This contract might not be legal, but any party can sign the dotted lines. Different classes cannot enter a contract legally, including; mentally ill people, intoxicated people, and children, because they lack contractual capacity.
Remember, the contract is termed voidable if a person lacking contractual capacity gets into an agreement. This enables the person lacking a contractual capacity to stop the contract without consulting the other party. The void option ensures the said party is not tied to contracts that work against them.
- Capacity and Minors
People under eighteen do not have a contractual capacity, and this rule’s exemption is when the contract regards necessities like shelter and clothing.
- Capacity and Mentally Disabled People
It is also possible for mentally disabled individuals to void contracts or have guardians do that on their behalf. People lacking the right mental ability to know the contract’s meaning cannot enter a contract. These individuals cannot negotiate a contract, which is the same for agreements with unavoidable necessities.
- Capacity and Intoxicated People
Intoxicated individuals are not allowed to get into contract agreements as they are not in their sound minds. However, they must take action for their results if they breach a contract.
2. Offer
The offer describes the terms and conditions statement the offeror is willing to meet. This offer elaborates the willingness to follow specific terms that will be bound after the offeree accepts the offer. Certain offers promise to act or not to act in a certain manner and expect the other party to do the same.
A court will distinguish actual offers from pre-offer negotiations depending on the presence of intent to create a contract. Remember, contracts are not formed when these individuals reply to each other’s invitations or requests.
Advertisements are also a leading discussion topic when differentiating between offers and preliminary negotiations. A business that creates contracts is not allowed to contact individuals that might have accessed it.
Revoked or rejected offers suggest the offeror has no power of acceptance and cannot be held accountable for the included terms. Also, the offer will proceed until its expiry date if it is not rejected.
3. Acceptance
An offer’s acceptance shows the willingness to follow the contract’s set terms and conditions. Acceptance should be made in a design outlined by the offer. The lack of a specified means of presentation means the offer should be accepted in a reasonable manner.
Particular offers are only accepted after the offeree achieves a certain act. These are popularly known as unilateral contracts, and it is where the offeror inputs their promise. It is also essential to note the timing of acceptance, mainly concerning the offeror’s capacity to cancel it.
4. Consideration
Consideration occurs when parties exchange one thing for another. Both contract parties should provide a valuable thing to ensure the other party will agree to it. The element’s value must not be in cash form only, and taking actions voluntarily is not termed as consideration.
5. Mutuality
Mutuality refers to the meeting of the minds, which demands both sides meet the contract’s set obligations. The law states that neither side is bound to the contract if this does not occur. Contracts lacking mutual consent are void.
Mutuality is crucial when one side cannot cancel the contract. These instances let the party perform their tasks using their discretion, and the courts cancel these contracts due to their lack of obligation.
Should Contracts be Written?
The answer is no. There are a few things that can make a contract legally valid and binding;
- A valuable thing must be exchanged
- All sides should be in agreement.
However, a few instances require the contract in written form to be valid. Particular states also demand that their real estate contracts lasting above one year be written. It is advisable to check your state laws to know whether a written document is important for it to be valid. Even though a written contract is unnecessary, drafting it just in case is advisable.
Final Thoughts
Contracts play an essential role in an organization’s setup, and the above article has discussed their top features. Kindly reach out for more information.