Typically, in order to be
enforceable, a contract must involve the following elements:
A- approval by the both sides (Mutual Consent)
The parties to the contract
have a mutual understanding of what the contract covers. For example, in a
contract for the sale of a "cow", the buyer thinks he will obtain a
Bull and the seller believes he is contracting to sell a horse, there is no
meeting of the minds and the contract will likely be held unenforceable.
B -Offer by the seller and Acceptance by the buyer
The contract involves an
offer (or more than one offer) to another party, who accepts the offer. For
example, in a contract for the sale of a car, the seller may offer the car to
the buyer for $1,000.00. The buyer's acceptance of that offer is a necessary
part of creating a binding contract for the sale of the car.
Please note that a
counter-offer is not an acceptance, and will typically be treated as a
rejection of the offer. For example, if the buyer counter-offers to
purchase the car for $800.00, that typically counts as a rejection of the
original offer for sale. If the seller accepts the counter-offer, a contract
may be completed. However, if the seller rejects the counter-offer, the buyer
will not ordinarily be entitled to enforce the prior $1,000.00 price if the
seller decides either to raise the price or to sell the car to somebody else.
C- Mutual Consideration (The parties have to exchange
something has value)
In order to be valid, the
parties to a contract must exchange something of value. In the case of the sale
of the car , the buyer receives something of value in the form of the car , and
the seller receives money.
While the validity of
consideration may be subject to attack on the basis that it is illusory (e.g.,
one party receives only what the other party was already obligated to provide),
or that there is a failure of consideration (e.g., the consideration received
by one party is essentially worthless), these defenses will not let a party to
a contract escape the consequences of bad negotiation. For example, if a seller
enters into a contract to sell a car for $100, and later gets an offer from
somebody else for $1,000, the seller can't revoke the contract on the basis
that the car was worth a lot more than he bargained to receive.
D- Performance or Delivery
In order to be enforceable,
the action contemplated by the contract must be completed. For example, if the
purchaser of the car pays the $1,000
purchase price, he can enforce the contract to require the delivery of the car .
However, unless the contract provides that delivery will occur before payment,
the buyer may not be able to enforce the contract if he does not
"perform" by paying the $1,000. Similarly, again depending upon the
contract terms, the seller may not be able to enforce the contract without
first delivering the car.
In a typical "breach of
contract" action, the party alleging the breach will recite that it
performed all of its duties under the contract, whereas the other party failed
to perform its duties or obligations.
Additionally, the following
elements may factor into the enforceability of any contract:
E- Good Faith (it has to be available)
It is implicit within all
contracts that the parties are acting in good faith. For example, if the seller
of a " car " knows that the buyer thinks he is purchasing a car, but
secretly intends to sell the buyer a horse, the seller is not acting in good
faith and the contract will not be enforceable.
F- it has to be committed to the Public Policy
In or
der to be enforceable, a
contract cannot violate "public policy". For example, if the subject
matter of a contract is illegal, you cannot enforce the contract. A contract
for the sale of illegal drugs, for example, violates public policy and is not
enforceable.
Please note that public
policy can shift. Traditionally, many states refused to honor gambling debts
incurred in other jurisdictions on public policy grounds. However, as more and
more states have permitted gambling within their own borders, that policy has
mostly been abandoned and gambling debts from legal enterprises are now
typically enforceable. (A "bookie" might not be able to enforce a
debt arising from an illegal gambling enterprise, but a legal casino will now
typically be able to enforce its debt.) Similarly, it used to be legal to sell
"switchblade kits" through the U.S. mail, but that practice is now
illegal. Contracts for the interstate sale of such kits were no longer
enforceable following that change in the law.
There is an old joke that
"an oral contract isn't worth the paper it's written on". That's a
reference to the fact that it can be very difficult to prove that an oral
contract exists. Absent proof of the terms of the contract, a party may be
unable to enforce the contract or may be forced to settle for less than the
original bargain. Thus, even when there is not an opportunity to draft up a
formal contract, it is good practice to always make some sort of writing,
signed by both parties, to memorialize the key terms of an agreement.
At the same time, under most
circumstances, if the terms of an oral contract can be proved or are admitted
by the other party, an oral contract is every bit as enforceable as one that is
in writing. There are, however, "statute of fraud" laws which hold
that some contracts cannot be enforced unless reduced to writing and signed by
both parties. For more information on the Statute
of Frauds . Note that, although sometimes an oral contract is referred to
as a "verbal contract", the term "oral" means
"spoken" while the term "verbal" can also mean" in
words". Under that definition, all contracts are technically "verbal".
If you mean to refer to a contract that is not written, although most people
will recognize what you mean by "verbal contract", for maximum
clarity it is helpful to refer to it as an "oral contract".
With my Best Wishes
Economic consultant : Motasem
Adwan
