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Essential Elements of Contracts. To make a legally binding contract, 5 elements must be satisfied: offer, acceptance, consideration, intention and capacity: Offer: One party makes an offer. Acceptance: The other party accepts the offer. Consideration: Each party provides consideration to the other. Consideration can be: a promise to pay money.
- Offer. An offer is a promise to enter into a contract on certain terms, where one party promises to do something in exchange for another party’s performance.
- Acceptance. Acceptance of an offer forms the ‘agreement’ – the contract – between the parties. Failure to adhere to the terms agreed upon can lead to legal consequences, including a breach of contract.
- Consideration. Consideration is another component of a contract. Consideration is a form of payment or other benefit, and both parties must give consideration to form a legally binding contract.
- Intention to create legal relations. The parties must intend to create a legally binding agreement, or there is no contract – also known as ‘contractual intention’.
A contract is based on an exchange of promises. Each party to a contract must be both a promisor and a promisee. They must each receive a benefit and each suffer a detriment. This benefit or detriment is referred to as consideration.
However, what makes an agreement or a promise binding is the presence of certain characteristics. In this article we talk about contracts - legally binding agreements between two or more parties - and not deeds, which may only have one party.
Under English law, bargains and not gratuitous promises are enforced, thus a promise will not be enforceable if it is not contained in a deed (implying that any promise is taken seriously) or supported by consideration.
Promissory estoppel operates to ensure a party does not go back on their promise when another party has relied upon that promise. Clearly, consideration relates to the exchange of promises, therefore it becomes an extremely useful tool in providing a remedy for aggrieved parties.
People also ask
What makes an agreement or a promise binding?
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Who makes a promise in a contract?
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What if a promise is broken?
Jun 6, 2024 · The court does not need to find an agreement or consideration to enforce the promise as a contract. However, it is difficult to prove a statement if there is no written agreement or written contract. Providing a remedy against a person who has broken their promise appeals to most people.
