Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Find a Job
  • Tutoring
  • Home
  • Law, Transactions, & Risk Management
  • Commercial Law: Contract, Payments, Security Interests, & Bankruptcy

Requirements to Form a Contract - Explained

Offer, Acceptance, and Consideration

Written by Jason Gordon

Updated at September 24th, 2021

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What elements are required to form a valid contract?Discussion QuestionAcademic Research

What elements are required to form a valid contract?

As previously discussed, a contract is a specific promise to another and also a specific demand of that person. The demand could be a promise of future action (bilateral contract) or immediate performance of an act (unilateral contract). The promise and demand is an offer. Meeting with the offerors demand is known as acceptance. Both parties must give or exchange something of value with the other. The thing of value is known as consideration. Consideration is the promise to give, or actual giving, of a requested benefit or the incurring of a legal detriment (i.e., doing something one does not have to do.). Both parties must be of a legal age and sound mind, and the purpose of the agreement cannot be illegal or against public policy.

Example: One person offers to sell a product, service, or offers something of value (money, goods, etc.) in exchange for someone elses product, service, or other thing of value. This constitutes a valid offer. The things of value constitute consideration. A second person accepts the offer by either agreeing to the offerors request to trade things or actually trading those valuables.

Note: An important thing to remember is that each party must provide something of value to the other. It does not matter how much value or even whether anyone else in the world would consider it valuable.

Next Article: Enforceable vs Valid Contract Back to: CONTRACT LAW

Related Topics

  • What is a Contract?
  • Sources of contract law?
  •  Unilateral Contract vs a Bilateral Contract?
  • Express Contract vs an Implied Contract?
  • Enforceable Contract vs. a Valid Contract?
  • What is a Void Contract vs a Voidable Contract?
  • Adhesion Contract 
  • Mental Capacity to contract?
  • Requirement of a Lawful Purpose?
  • Common types of Voidable Contract?

Discussion Question

Why do you think that the law requires an agreement to have all of the elements to be enforceable? Can you think of situations where any of these elements are not present, but you believe the agreement should be enforceable anyway?

Academic Research


contract requirements

Was this article helpful?

Yes
No

Related Articles

  • Standby Letter of Credit - Explained
  • Priority (Security Interest) - Explained
  • Repudiation (Contract) - Explained
  • Perfection by Filing Financing Statement - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand