This document summarizes the six elements of a valid contract: 1) offer, which is a proposal made with serious intent by an offeror to an offeree; 2) acceptance, which is an unqualified agreement to the offer's terms without modification; 3) genuine agreement between the parties to create a final contract; 4) consideration, which is the exchange of benefits and detriments by the parties; 5) contractual capacity of the parties to enter into an agreement; and 6) legality in accordance with civil and criminal law as well as public policy.

1. Six Elements of a Contract
Nikki Sinatra
Crockett
Period 3

2. The Offer
 Offer- A proposal by one party to another
to create a legal binding agreement.
 Three elements;
 Offer- The proposal to one person.
 Offeror- Makes the offer with serious
intent.
 Offeree- The person the offer is made to.
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3. Acceptance
 Acceptance- Unqualified willingness to go
along with the offer.
 Mirror Image Rule- An offer is accepted
exactly as is without an modifications
(changes).
 5 ways to terminate;
 Rejection by the offeree
 Counter-offer by the offeree
 Revocation by the offeror
 Lapse of time
 Death of the offeror or offeree

4. Genuine Agreement
 Genuine agreement- offer and acceptance go
together to create a final agreement.

5. Genuine Agreement
 Unilateral Mistake- Mistake one party makes.
2 Types;
Nature of agreement-Signing a contract you don’t
understand or have not read.
Identity of a party- Bound by contract with face to
face meetings.
 Bilateral Mistake- Mistakes both parties make.
2 Types
Possibility of performance- Contract cannot be
performed.
Subject matter- Either party can void contract.

6. Genuine Agreement
 Fraud- Wrongful or criminal deception intended to
result in financial or personal gain.
 Innocent Misrepresentation- Make an innocent
statement of supposed fact that turns out to be false.
 Duress- Overcoming a person’s will by use of force or
by threat of force or bodily harm.
 Economic Duress is a threat to a persons business or
income.
 Under Influence is an unfair persuasive pressure
within a relationship of trust.

7. Capacity
 Capacity- Legal ability to enter a contract.
Minors can enter a contract but when they turn of
legal age (18) they can ratify the agreement.
Mentally Impaired- When declared insane, contract is
automatically voided.
Intoxicated- Not understanding the nature, purpose, or
effect of contract; voided.
Convicts & Aliens- Certain limitations.

8. Consideration
 Consideration- The exchange of benefits and
detriments by the parties to a contact.
Benefit- Something a party receives in the agreement.
Detriment- Something a party gives up in the
agreement.

9. Consideration
Agreements Not enforceable;
Illusory- All parties are required to do something.
Future gifts &legacies- Promise to give a gift to
another person.
Past Consideration- Given or promised in the past that
somebody tries to use again in a new contract.
Preexisting Duties- An obligation a person already has
to do something
Promise to attend places- All contracts are
agreements, but not all agreements are contracts.
Enforceable without consideration;
-Promises under seal
-Debts ended by statute of limitations
-Enforced by promissory estoppels

10. Legality
 Legality-The quality or state of being in accordance with the
law.
Six Statutes
 Civil &Criminal- Agreement to commit a crime or tort.
 Usury Statutes- State sets a max interest rate.
 Interest- Fee the borrower pays to the lender for using
the money.
 Usury- Charging too high for an interest rate.

11. Legality
 Public Policies- A legal principle that holds that
nobody should be allowed to do something that harms
the public.
 Unreasonably Restrain Trade- Protects the right to
make a living.
 Not to Compete- Someone buys a business, that
person also buys the seller’s goodwill not to compete.
 Price Fixing- Protect Competition.
 Defeat Competitive Bidding- Offer to buy/sell goods at
a stated price.
 Obstruct Justice- Contract in the way of dispensing of
justice is illegal.
 Inducing Breach of Duty- Hold positions of trust and
have responsibility for the well-being of others.