What Makes a Contract Legally Binding? Part 1
A contract is one that formalizes the intention of an agreement between two or more parties. Since contracts are used regularly in the construction industry, it’s safe to say that most construction professionals understand the basics of contracts. However, things become complicated when a dispute arises and parties decide to take the matter to court. From there, a judge will decide if a breach of contract has occurred and if the contract is enforceable.
Our Orlando construction attorneys know that there are certain factors that make a contract enforceable. We’ll discuss these elements below.
Elements of a Legally Binding Contract
There are four things that make a contract legally binding: an offer, acceptance of that offer, consideration, and mutual understanding.
Offer: An offer is the first step to forming a contract. The offer must be specific, complete, and made with the intention of being bound by acceptance.
Acceptance: Next, there must be an acceptance of the offer that must be made while the offer is still open.
Consideration: Next, there must be an exchange of consideration where something of value is given an exchange for a promise or performance of an act.
Mutual Understanding: Finally, there must be mutual understanding between contract parties of all that the contract entails. Without this, there is no agreement.
Oral and Written Agreements
Beyond the four elements mentioned above, the subject of verbal and written contracts comes into play. As long as there is an offer and acceptance and an exchange of consideration, an oral or written contract can be enforced. However, oral contracts can be difficult to prove in a court of law. To prove that an oral agreement is valid, you will need evidence that the agreement took place:
- Were there any witnesses?
- Did an action occur in response to the agreement?
- Were there any documents exchanged or recorded?
- Any payments made?
Nonetheless, our Orlando construction attorneys believe that a written contract is one of the safest ways to avoid disputes.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.