The Real Estate Encyclopedia
What Are The Essentials Of A Valid Contract?
Category - Home Buying Questions - General Home Buying FAQ's

The valid contract meets all the requirements of the state laws.  It is binding upon its parties and legally enforceable in a court of law.  In order to be legally valid, e.g. binding and enforceable, the following requirements must be met:

 

       Legally competent parties

       Mutual agreement

       Lawful objective

       Consideration of Cause

       Contract in writing when required by law

 

To be able to be legally enforceable, all parties must be legally competent.  One of the most critical standards is that of age.  A person must reach the age of majority to be legally capable of entering into a contract.  Minors do not have contractual capability a contract signed by a minor is voidable, although a minor can be a grantee.  In addition, persons who have been declared incompetent by a judge may not make a valid contract and any attempts to do so results in a void contract. 

 

Mutual agreement requires that the parties express contractual intent.  This means that their intention is to be bound by the contract.  In addition, the agreement must be freely given and not have been coerced under duress, menace or undue influence.

 

Lawful objective means that the contract cannot call for the breaking of any law. 

 

Consideration means that something of value has been exchanged between the parties to the contract, such as a promise to do something, money, property or personal services. 

 

Contract in writing relates to the statute of frauds law, which is present in most states.  Its purpose is to prevent frauds by requiring that all contracts for the sale of land, or an interest in land, be in writing and signed to be enforceable in a court of law.  The purpose of requiring that a contract be written and signed is to prevent perjury and fraudulent attempts to see legal enforcement of a contract that never existed. 

 
Category(s)
Home Buying Questions - Buying Legal & Closing FAQ's
Home Buying Questions - General Home Buying FAQ's
Home Selling Questions - General Home Selling FAQ's
Home Selling Questions - Selling Legal & Closing FAQ's
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