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A contract is an agreement between two or more parties that the law recognizes and will enforce. A contract does not have to be some long documents prepared by lawyers. In fact a person encounters contracts throughout his or her daily life, in a form of paying for parking, bus token, even buying a cup of coffee involves a contract. A contract can be oral, written and then it can be explicit like an apartment lease that spells out the terms of the contract or implicit just like you buying a cup of coffee buy handing the money and taking the coffee no words need to be exchanged

A Valid Contract

In order for a contract to be valid three things must exist.

  1. Offer – a promise to do something or give something of value to another person in exchange for something of value.
  2. Acceptance – when a person accepts the offer there is said to be a meeting of the minds and a binding contract exists. Means of accepting or what constitutes and acceptance is matter for some discussion.
  3. Consideration – both parties have to promise to exchange something of value in order for there to be a contract. What constitutes as consideration is a matter of some discussion, however, even a peppercorn is famously considered as consideration.  Please note that past consideration, in other words that which was done before the offer and acceptance cannot constitute as consideration. There are some exceptions to the need of consideration for example if a contract is made under seal it does not need consideration to be valid.

If you request some goods that were delivered to you and you fail to discuss the price of these goods, it does not mean that the contract will fail.  The law will imply a promise to pay in a request for goods or services. Quantum meruit will step in a dictate that payment must be made what it is reasonably worth.  Quantum meruit is an equitable doctrine that states that no one should unjustly benefit from the labour and materials of another.

Legal Capacity to Contract

Not everyone is eligible to enter into a contract. Generally for a contract to be enforceable, the parties must meet minimum standards of intelligence, rationality, and maturity. For these reasons minors and persons under certain mental disabilities may not have to honour their contractual obligations.

Legal Requirements 

Even if a contract meets all requirements of a contract is might not be enforceable, depending on the contract. For example, a contract dealing with the land must be in writing, other contracts must be witnessed such as a Separation Agreement.

A contract cannot be illegal in nature as a contract to commit crime. Such contracts would violate Statute law and public policy.