The requirements of a contract are a valid offer, acceptance, consideration, capacity of the parties and legality of the subject matter.
In order to have a valid offer, “it must indicate a clear intent to make a contract. It must be sufficiently definite so that a court can determine the actual intent of the parties. And it must be communicated to the other party. This offer is transmitted directly to the offeree by acts or by words, whether spoken or written, through any medium whatsoever.” (Emerson, 99)
To have a valid acceptance, according to Emerson page 103, “the acceptance must be clear and unqualified; an acceptance that modifies the offer is treated as a counteroffer.” In addition, “the offeree must accept in any manner required by the offer.” (Emerson, 103) Failure to meet requirements of the offer, such as conditional acceptance, may be fatal to the contract.
Consideration is “something a party provides in exchange for something from the other party.” (Emerson, 93) Furthermore, “consideration is based on the idea of quid pro quo (something for something): some action, forbearance, or promise. In almost all contracts, consideration is required for enforceability.” (Emerson, 105) However, there are a number of reasons why consideration may be absent, such as, illusory promises, doing what one is bound to do, moral obligation, past consideration, and statute of limitations.
Capacity of the parties is “only a person who is legally competent has the power to make a binding contract and can be held to any promises therein. Persons who may be considered to be legally incompetent include minors, insane persons, and, sometimes under specified circumstances, intoxicated persons.” (Emerson, 99)
Legality means that “if the subject matter is not legal, the agreement is not enforceable in court.” (Emerson, 133) This further relates to agreements that