A legally recognized offer and acceptance creates a «meeting of minds» or mutual consent between the parties. The law requires the contracting parties to prove that they mutually agree with the terms of the contract. Contracts arise when an obligation is concluded on the basis of a commitment by one of the parties. In order to be legally binding as a contract, a promise must be exchanged for reasonable consideration. There are two different theories or definitions of consideration: the bargain consideration theory and the benefit-harm consideration theory. Your written agreement becomes your proof of what has been agreed and prevents anyone from forgetting or changing the story later. The drafting of the contract also leads the parties to focus on the essential points and reach a final agreement. When a party takes legal action for breach of contract, the first question the judge must answer is whether there was a contract between the parties. The complaining party must demonstrate four elements to prove the existence of a contract: To be enforceable, some agreements must be in writing. Situations in which an agreement must be entered into in writing may vary from state to state, but generally include transfers of real estate, sales of property valued at more than $500, and contracts that take more than a year to complete.
This video will guide you in creating a good business contract: for a contract to be legally binding, valuable consideration is required. This means that one party agrees to do something in exchange for a value proposition from the other party. Essentially, the consideration is a fiduciary agreement between the two parties. This is often a monetary price for the service exchanged, but it can also be something of value. All parties to the contract must receive something of value, otherwise it will be considered a gift and not a contract. A contract is a voluntary agreement between two or more parties that is legally enforceable. It is a legally binding agreement that requires two or more parties to perform certain tasks. It establishes rights and obligations vis-à-vis the contracting parties. A contract is a promise or set of promises between two or more parties that allow the courts to render a judgment. It is a set of laws that deal with the formation and execution of the contract.
Entering into a contract typically requires an offer, acceptance, consideration, certainty, capacity, free consent, and mutual consent of two or more persons to be bound. Forms of contract may be made in writing, orally and by conduct. Each agreement must contain the elements essential to the validity of a contract. The Agreement includes a valid offer from one party and a valid acceptance of the Offer by the other party where only this Agreement has become a contract. Agreements that have contained essential elements of a valid contract are legally enforceable. In the Muluki Civil Code, 2074, the offer, acceptance, legal relationship, legal capacity of the parties, free consent, legitimate objects, writing and registration, certainty, possibility of performance and not expressly declared null and void and not expressly declared null and void, are considered elements of a valid contract. In the modern era of legal development, contract law is important in all commercial activities of human society. It is an essential subject of economic or company law.
Contract law is considered an important part of business law because the transaction is made between two or more parties and the relationship between them is governed and regulated by the contract. Courts and formal lawsuits are not the only option for individuals and companies involved in contractual disputes. The parties may agree that a mediator will review a contractual dispute. The parties are not bound by a mediator`s decision, but can be persuaded by the mediator`s rules to avoid a costly legal dispute The parties can also agree on binding arbitration of a contractual dispute. In arbitration, a neutral party listens to the arguments of both parties and makes a decision that binds the parties. It`s cheaper and shorter than a court battle. To enter into a contractual agreement, both parties must be competent and must not be under the age of 18 or under the influence of drugs or alcohol. All parties must be clear when concluding the contract and have the legal authority to join the contract, which is especially important for companies or third parties.
A contract created by force or coercion is not considered legally binding, nor is it an illegal activity, such as a contract for the sale of illicit drugs.
