Elements of a Contract
Law 531
February 8, 2010
Elements of a Contract
There are three main elements to a valid contract; offer, acceptance and consideration. The offer must have the clear intent to enter into a contract. It must include who the parties are, the items or work being exchanged, a clear set price for those services, payment terms, delivery terms, and performance timelines. Acceptance by the offeree is when they sign the offer and return it to the offeror. The means for which the offeree can return the offer signed often determines when the contract is put into place. This method of return is usually stipulated in a letter that is mailed with the offer. Most would use mailing the offer to return it to the offeror, and in that case the offer becomes valid once it is postmarked in the mail, otherwise known as the mailbox rule. The final element of a contract is consideration on both parties involved. A contract is only valid if both parties are giving up something in order to reach a particular objective for each party. An example is “if you sign a contract to buy a 1980 Mercedes for $17,000, your consideration is the $17,000 and is given in exchange for the car.” (Jennings, M. M.,2006)
With any contract there are always risks involved from the moment you start the journey to form a contract. The process could go thru many revisions, if each side can’t agree mutually on terms of the agreement. This could severely delay or even prevent an offer from becoming a contract. Management needs to do their research into the project to ensure that what they deliver to the offeree is valid and satisfies both companies’ interests in the project. Another big management decision when negotiating a contract is to not make the offer sound like they are miss-representing themselves, or providing fraudulent information in the offer. This is another reason for management to carefully draft an offer that is fair and has the consideration of both parties...