Essential Elements of a Valid Contract
A contract is formed when certain requirements are met. The law will consider a contract to be valid if
the agreement contains all of the following elements:
1. Offer and Acceptance;
• Example offer: Joe offers to sell his car to Sally for $5,000.
• Example acceptance: Sally agrees to buy Joe’s car for $5,000.
• Can be done orally or in writing. Certain contracts must be in writing. See our Blog post “Florida
Statute of Frauds: Contracts that Must be in Writing.”
2. An intention between the parties to create binding relations;
• offer + acceptance = “meeting of the minds.” Meeting of the minds means the parties intend to
be bound by their agreement.
3. Consideration;
• Each party must promise or provide something of value to the other party. A bargained for
exchange.
• Example: Joe’s consideration is his promise to sell his car to Sally. In exchange, Sally’s
consideration is her promise to pay Joe $5,000.
4. Legal capacity of the parties to act; and
• The parties must understand what they are doing.
• Example: Insane individuals lack capacity to enter into legally valid contracts because they
cannot understand what you are doing. Minors do not generally have the capacity to enter into
a contract (with some exceptions).
5. Legality of the agreement.
• The purpose of the agreement cannot violate the law.
• Example: A contract hiring someone to rob a bank or kill a person is invalid because it violates
the law.
• An agreement that lacks one or more of the elements listed above is not a valid contract.
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