Essentials of a Valid Contract

A contract is a written or oral agreement to do or not to do a certain thing.

The essentials of a valid contract are:
1. Capable parties
Lawful object
3. Consideration
4. Offer and acceptance

1. Capable parties
To be a capable party, the person must have the legal capacity to contract. Typically, this means the person must be at least 18 years old and of sound mind.

Other competent parties would include:
- Person with authority to enter into contracts on behalf of a corporation
- Person with a proper power of attorney
- Fiduciary given the authority to contract
- Emancipated minor: somebody under 18 who is legally allowed to act on their own behalf because they got married, served in the military, or through court action divorced their parents

2. Lawful object
A contract must be entered into for a legal purpose. For example, if a movie talks about a contract to kill, that is really no contract at all because it is not lawful.
 A contract like this with an illegal purpose is void. A contract must also be entered into freely, without duress, threats, blackmail, misrepresentation, or fraud.

3. Consideration
Normally when we think of consideration we think of money, but consideration can be anything of value. It is bargained for and received. Consideration can even be love and affection.

4. Offer and acceptance
Offer and acceptance is also called mutual consent or a meeting of the minds. An offer must contain the exact terms and conditions, and the offer must be accepted without changes. The offer must be clear in character, the property must be accurately described to identify the subject matter, and you must have an exact price. You can not offer to buy a house for "a whole lot of money"; you must say one million dollars or the exact amount you are offering.

Do not forget the "or ee" rule!

The offeror is the party giving the offer; the offeree is the party receiving the offer. In real estate, the offer is usually made by the buyer and received by the seller. An offer must be accepted without change by the offeree or the offeree's authorized agent.

Prior to acceptance, an offer or counteroffer can be revoked.

An offer will be terminated by death or insanity of the offeror or offeree; destruction of the property; or a material change. A counteroffer occurs when the seller changes any of the terms made by the offeror. This reverses the legal position of the parties and the offeror becomes the offeree, while the offeree becomes the offeror. This makes the counteroffer a brand new contract.