What Elements Are Required for a Contract to Be Enforceable?

When entering a professional or business relationship, one of the most important steps is to create a contract. A contract is an agreement that establishes a set of specific obligations between two or more parties. It informs each party of their rights and duties. If one of the involved parties breaches the contract, they will be subject to legal consequences.

The elements of a legally enforceable contract include legality, capacity, an offer, consideration, mutual consent, consideration, specificity of conditions, and, usually, an unambiguous written contract.

Legality

The activity covered by the contract must be legal. A contract cannot be legally enforceable if the exchange it contemplates is criminal. For example, you cannot create a legal contract with someone to assault or murder someone.

Capacity

To be legally competent to enter into a contract, a person must meet a specific set of criteria. These factors include:

• Age (In North Carolina, you must be 18 or older to enter most contracts.)
• Being of sound mind
• Being conscious
• Understanding the language of the contract
• Having no mental disabilities
• Not being under duress or undue influence
• Not being intoxicated

Furthermore, for an individual to sign a contract on behalf of a company, they must have the full authority to sign.

If a person signs a contract without the relevant capacity, a court can declare it null and void.

Offer

The contract begins because there is an offer of some kind. The offering party must communicate what they offer to do, sell, or provide. The offer is made in the expectation of an exchange with the accepting party. A contract must explicitly state what this exchange entails, including:

• What will the parties exchange?
• How will they execute the exchange?
• When will the exchange occur?
• What is the cost of the exchange?
• Who is responsible for the exchange?
• What are the consequences if a party fails to fulfill its obligations?

If your contract does not address these concerns and no law addresses the issue, no party will be legally able to enforce the relevant aspect.

Consideration

For a contract to be enforceable, it must also outline what is exchanged for the offer (the consideration). This consideration could be:

• Money
• Property
• Services
• Assets
• Protection

Without such consideration, the contract becomes “voluntary” rather than legally enforceable.

Mutual Consent

Mutual consent is the willingness of all parties to do business with each other. Having the contract in written form makes proving intention much more straightforward.

Acceptance

An offer must be made, and the other party must accept the offer for an enforceable contract to exist. The offer could be accepted in writing, in person, or over the phone. The acceptance must be an obvious statement that the accepting party intends to be bound by the terms of the offeror.

Specificity

For a contract to be enforceable, its terms and conditions should not contain ambiguity. Having clarity around the terms and conditions of the contract, as well as the identities of the involved parties, can reduce the possibility of an accidental breach of contract.

Contact an Experienced Attorney Today

If your legal issue requires the creation of a contract, Mullen Holland & Cooper P.A. can give you the support you need. We offer legal services in the areas of:

• Estate planning
• Civil litigation
• Business law
• Commercial real estate

Our Gastonia-based firm has been helping North Carolina and South Carolina individuals and businesses since 1950. Our legal team will work to ensure that your contract is clear, fair, and legally enforceable. Call us today at 704-864-6751 or contact us online for a consultation with one of our experienced attorneys.