What is a Contract?
The definition of a contract is a voluntary exchange of promises, creating obligations which, if defaulted on, can be enforced remedied by the courts.
This basically means that there has been a promise by one party to provide something in return for something else from another party. Contracts happen all the time and can be in different forms whether written or verbal, or unilateral or bilateral. But what conditions are necessary for a contract to really be valid?
4 Conditions of a Valid Contract (or 5 or 6)
1. Consensus/Consents: Under both common and civil law, there needs to be a clear offer and acceptance of that offer between the offeree and the offeror. The offer must have must some essential element such as rewarding a service with a certain amount of cash and can have an expiry date or not. As well, the acceptance must be unconditional or else would just be considered a counter offer.
2. Intention/Willingness to be Bound: There must be a serious intention or willingness to go through with an offer at the time of it’s proposal. For example, if I promise my friend $1,000,000 if I don’t make this basketball shot and I miss, I can’t be taken to court by my friend for that million dollars.
3. Capacity: Does the person agreeing to this contract actually have the capacity to accept it? If a senior who needs full time care and is losing brain function signs a contract to give away his property to a stranger one can argue he is not in capacity to make the agreement to transfer the asset.
4. Legality: The cause of the contract must actually be legally allowed to take place.
5. Formalities (If Necessary): For certain types of contracts, like for purchasing real estate you need to have it notarized or for getting married it needs to be in writing, you may need to follow certain formalities.
6. Consideration (Common Law Only): There needs to be some sort of consideration to both parties.
If a contract does not have the stated condition above than it is not valid and will not hold up court. Obviously there might be some exceptions to the definitions of each condition as expected but for the most part these are the guidelines to go by.
Hope this helps!