The Basis and Components of Contracts

English common law is the basis for most commercial contract law. A contract consists of an agreement between two or more parties to perform or not perform specified actions. When recourse to contract occurs, the initial step is to establish the existence of a contract, and then to examine the wording of the contract for legal and adherence and coherence. For a contract to be legal and binding, it must feature several elements (listed below). The first step in a contract issue is always to make sure that a contract actually exists. For a contract to be legally binding, it must satisfy several legal criteria:

• The contract must present a clear offer. Signing the contract indicates an expression of willingness to enter into the contract and acceptance of its binding conditions, i.e. willingness to accept the offer as The identity of the person or corporation making the offer must also be recorded (this varies according to jurisdiction etc.).
• Under English contract law, the contract must be distinguishable from an “invitation to treat”, since this is not a legally binding offer, only an invitation to provide an offer.
• Acceptance is the first formal element. Acceptance of the offer signifies the signee’s unconditional agreement to the terms stated in the contract. Following signature, the signee, or the organisation that the signee represents, will be legally bound to fulfil whatever actions are required by the contract and comply with the stated conditions.
• The second formal element of a legal contract is consideration. This describes the nature of the exchange, detailing unambiguously what products or services will be exchanged for what amount of monetary compensation.
• The final formal element is intention to be legally bound. Both parties provide explicit consent to be bound by the terms of the contract so, by implication, accept the possibility of penalising consequences resulting from failure to abide by the terms and conditions stated.