When parties come together to make a deal, they usually want to ensure that they have a binding agreement. To have a legally enforceable agreement, several elements must be in place. Here`s a breakdown of what needs to happen for an agreement to come into existence.
The first step in creating a contract is that one party must make an offer to enter into an agreement. An offer is a proposal made by one party to another intending to create a legal relationship. The offer can be made in writing or orally and must be communicated to the other party.
Once the offer has been made, the next step is to accept it. The acceptance must be communicated by the other party to the offeror. Acceptance must be made without any changes to the original offer. Any modifications made by the party accepting the offer turn the initial offer into a counteroffer, which requires the original offeror to accept the modified terms.
Consideration refers to the exchange of something of value between the parties. In general, each party must give something up to make the agreement legally enforceable. This could be money, property, or a promise to do something. Consideration is required in most contracts, but it does not have to be equal value, and it can be a symbolical amount.
Both parties need to have the capacity to enter into the agreement. This means they must be of legal age and sound mind. Parties that are under the age of 18, have a mental illness or impairment, or are under the influence of drugs or alcohol may not have the capacity to enter into a legal agreement.
Both parties must have the intention to create a legally binding contract. If either party is only making an offer or accepting an agreement as a joke or a casual conversation, the agreement does not come into existence.
The agreement must be legal for it to be enforceable. Neither party can be asking for something illegal or against public policy. For example, a contract to sell illegal drugs or carry out a murder would be illegal and not enforceable.
In conclusion, an agreement comes into existence when there is an offer, acceptance, consideration, capacity, intent, and legality. Before entering into any contract, it`s essential to ensure that all of these elements are present. By doing so, you ensure that the agreement is legally enforceable, and both parties can be held accountable for their obligations. As always, consulting with a legal professional is recommended to make sure that the agreement is valid and enforceable in your area.