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Four Elements of a Good Contract

by Norris Law Group on November 20, 2014

Four Elements of a Good ContractThe term “contract” is commonly used to describe all kinds of agreements made between parties, including (but not limited to) business contracts, marriage contracts, written contracts, and even oral contracts. But what exactly is a contract in the legal sense? This must be understood in order to enforce any contract.

Let’s say, for example, that one party in a business deal chooses to file a “breach of contract” suit against another. In order for a judge or mediator to fully understand the issue, the plaintiff must establish that the contract in question was made up of four critical elements, according to the Judi
cial Education Center at the University of New Mexico
:

  1. Offer: One party promised to either perform or not perform a specific action, either now or in the future.
  1. Consideration: “Something of value was promised in exchange for the specified action or non-action.” The “thing of value” could be money, a service, an agreement, or simply “reliance on the promise.” Consideration is the actual value that brings the parties into the contract in the first place, and also distinguishes a “contract” from a “gift” in legal terms. Gifts are given with no intent of receiving anything in return; this is not the case with a contract.
  1. Acceptance: The acceptance of a contract should mirror the terms of the initial offer, and may be expressed verbally, signature, or by the performance of the actions described in the contract.If acceptance does not mirror the terms in the contract, it is considered to be either a rejection of the contract or a counteroffer to it.
  1. Mutuality: Mutuality means that the parties involved in the contract essentially came to “a meeting of the minds” when they entered into the contract and that they both fully understood the terms.

While it is certainly possible to enter into contracts on one’s own without the benefit of legal counsel, it may be your best interest to speak with an experienced contract attorney before drafting or signing a contract.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County, UT and throughout Utah, Wyoming and Idaho. Contact them today at 801-932-1238 or online for a free consultation.

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