What is a legal contract?
In general, a legal contract is an agreement between to legal persons, which can include a natural person or a corporation. When a contract forms, there are four major things that need to occur. There needs to be an offer, acceptance of that offer, the intention to create legal relations and consideration. There are quite technical and complicated terms and many people do not really know what they mean. Briefly, to try and explain the process, the courts describe the need for a ‘meeting of the minds’ . When an offer is made, it usually need to be to a defined class of persons. An example of a situation where it is possible that an offer may exist but in fact does not, is in the case of the existence of a public rewards leading to information for the capture of a criminal and a person gives the information without knowledge of this offer but is later told of its existence. This is not an enforceable contract because the supposed offeree is not capable of accepting the offer because they are unaware of it so there is no acceptance of the offer.
The second major element of the formation of a contract which is not widely understood is the concept of consideration. This is the idea that for a binding contract to take place, something of value must be exchanged, otherwise the necessary legal relationships is that of a deed. Consideration means that a contract cannot be used for the purpose of a gift to someone else. Consideration can be used to prevent an unfair contract occurring because if a bargain is unfair to a gross extend, there will be a failure of consideration under the contract.
Another major element is the concept of intention to create legal relations. Usually, in a formal contract this is stated and the writing of the contract can be used to indicate it. However, a formal contract is not always used and this can be more ambiguous in terms of trying to analyse the concept of a legal relationship which forms a valid contract. However, if the intention to create legal relations cannot be established, the contract will fail to form in a legal sense.
Assistance with a Contract
These are the major elements in relation to the formation of a contract. If you need help with the drafting of a contract, you can post your contact details to the right or chat with one of our lawyers on line about it. They are here in business hours and if you post your question in the box below, a lawyer should get back to you almost instantly.