When one party fails to uphold their half of a bargain, the other may end up seeking to enforce the agreement in court.
One of the first things that will have to be established is the existence of a valid contract between them. A contract doesn’t necessarily have to be lengthy, complicated or even written down to be binding. Conversely, a 20-page agreement filled with legal terminology isn’t automatically enforceable simply because both parties signed it.
There are 6 essential ingredients to a contract
When determining whether or not a contract is enforceable, a court has to look for the following elements:
- Offer: One party clearly proposed an agreement with the other on a specific issue, with defined terms
- Acceptance: The other party agreed to the terms, either directly or after the exchange of counteroffers
- Consideration: Something of value was to be exchanged between the parties, such as money for goods or services for payment
- Mutual Consent: Each party willingly made the agreement, without coercion, duress, fraud or mistake
- Capacity: Both parties were legally able to enter into the contract, being of sound mind and legal age
- Legality: The agreement’s purpose is not illegal on a local, state or federal level
Even when all of the above basic elements are there, a contract can still fail if other issues prevent its enforcement. For example, an otherwise valid agreement could be unenforceable because it was past the statute of limitations on a claim. Or, the court may find the agreement so lopsided in nature that it is unconscionable to enforce.
Professional legal guidance can help businesses evaluate their agreements, understand their rights and determine what remedies may be available after things go wrong.