Real Estate Forms- What is a Contract?

What is a Contract?

A contract is defined as: An Agreement between two or more persons consisting of a promise, or mutual promises that the law will enforce or the performance of which the law recognizes as a duty.

What makes a Contract valid?
For a contract to be valid a number of factors exist:
*Legal Capacity of the parties
*Mutual Agreements
*Consideration
*Lawful Purpose
*Written Agreement

Legal Capacity
Legal capacity means that the people entering into a contract are responsible in such a way that the law will make them bound by their promises. (example: minors, mentally handicap, etc)

Mutual Agreement:
A valid contract also requires that a bargain be struck between the parties to the contract. All parties must agree on the same things and have a "Meeting of the Minds."

Consideration:
Consideration may be money, something of value, etc

Lawful Purpose:
A contract must be for a lawful purpose to be valid. Example: a contract to commit a crime is not valid or enforceable.

Written Agreements:
Not all contracts must be in writing to be valid, however it has been proved in court cases that written contracts are more enforceable than oral contracts.