Contracts are legal documents that are crucial for businesses and individuals. They establish legally binding agreements between two or more parties and outline the terms and conditions of the agreement. The essential element of a contract is what makes it legally binding. In this article, we will discuss what is an essential element of a contract.

Offer and Acceptance

The first essential element of a contract is an offer and acceptance. An offer is a proposal made by one party to another, stating the terms of the agreement. The other party must accept the offer, agreeing to the terms and conditions outlined in the offer. Only when both parties have agreed to the terms of the offer, the contract becomes legally binding.

Consideration

Consideration is one of the essential elements of a contract. It refers to the exchange of something of value between the parties involved. For instance, in a contract for the sale of goods or services, the consideration would be the payment made by the buyer and delivery of the goods or services by the seller.

Capacity

Another essential element of a contract is the capacity of the parties involved. The parties must have the legal capacity to enter into a contract. For example, a minor cannot enter into a contract because they lack the legal capacity to do so.

Legality

A contract will only be valid if it is legal. The terms of the contract must not violate any laws or public policy. For instance, a contract that involves illegal activities such as selling illegal drugs would be null and void.

Intention to Create Legal Relations

The intention to create legal relations is another essential element of a contract. It means that the parties involved must intend to create a legally binding agreement. For example, if two friends agree to meet for coffee, it is not a contract because it is not intended to be legally binding.

Conclusion

In conclusion, a contract is a legally binding agreement between two or more parties that outlines the terms and conditions of the agreement. The essential elements of a contract are offer and acceptance, consideration, capacity, legality, and intention to create legal relations. It is essential to ensure these elements are present in a contract for it to be legally binding and enforceable.