Contracts serve as a guiding compass for business partnerships. Its terms and provisions articulate the roles, expectations and responsibilities of the parties involved. Yet, a contract needs more than just complex jargon and provisions to be enforceable. It must include certain key elements to give it legal ground.
Generally, a contract is an agreement made by at least two parties. In New York, enforceability lies in the presence of these key elements: offer, acceptance, consideration, an intent to be bound and mutual assent.
Additionally, contracts do not always have to be in writing. Even verbal agreements can be valid if they meet the requirements.
To bring a contract into existence, at least one party must make an offer to another. An offer is where one party promises to execute or refrain from performing specific actions in exchange for something that the other party will provide.
The party receiving the offer must be able to accept or reject the contract, whether verbally, through action or in writing. They may convey acceptance in one of three ways: express, conditional or implied.
Consideration is what incentivizes the parties to enter into the contract. It is the value that both parties mutually agree to exchange, such as money, goods or services. Contracts without consideration may be seen as a promise or gift with no expectations.
Intent to be bound
Each party should be capable of understanding the contract they are making or agreeing to be legally bound to. Parties who are under 18 years old, under the influence or incapacitated may not be able to sign a contract.
Also known as a meeting of the minds, mutual assent means that all parties are on the same page regarding the contents of the contract and agree to it.
Ensure enforceability with a thorough review
If one of these key elements is missing, it could render a contract invalid. However, even when all these elements are present in an agreement, there may be ways to challenge it. A lawyer specializing in contracts can help review an agreement for potential weaknesses and propose solutions to strengthen it.