What is a Contract?

A contract can be either verbal or written. They create mutual legal obligations between two or more private parties. Verbal contracts are more difficult to enforce, so it is advised to avoid them at all costs.

We deal with contracts on a daily basis and they govern all aspects of our lives. Not all contracts are considered valid unless they meet certain elements. For some agreements to be valid they have to be in writing. For instance, those that involve big sums of money(over $500). It is crucial to understand the rules governing them in order to create valid contracts.

All contracts must contain the following elements to be valid:

1. An offer (I will sell you 20 pairs of shoes for $500)

2. An acceptance of the offer (Other party agrees to pay $500 for 20 pairs of shoes)

3. Promise to perform

4. A valuable Consideration ($500)

5. A specified time when the event must take place (The shoes must be delivered within a week, e.g.)

6. Special terms and conditions of how the shoes should look like (They must be made of leather, e.g.)

7. Performance (Shoes delivered to the buyer and the buyer paid for it).