There are four essential elements that make up the
subject matter of a contract. These
elements must be present if a contract is to be legally binding and
enforceable.
First: Competent
Parties. The general rule of law is that all parties shall be
regarded as having read and therefore engendered an understanding of the
instrument to be executed. This rule is
true if even if one or more of the parties are considered “slow” or
illiterate. Certain persons such as
minors and persons with mental defectives or under the influence of drugs or
alcohol however, can be held incompetent.
Second: Legal Objective: A contract for an illegal purpose, or
committing a tort (a private or civil wrongful act, injury or in violation of
public policy) is declared null and void.
ab initio. (from the beginning)
Third: Consideration: Often thought of in terms money or goods
used in exchange for something of equal value, consideration, under a contract,
is defined as the obligation that each party imparts to the proposition so as
to construct an enforceable agreement.
Consideration is usually regarded as something of value given in
exchange for a promise.
Forth: Mutual
Assent: Prerequisite to the
formation of a contract is the element of mutual assent. “a meeting of the
minds” It is the means by which the
parties are regarded as having objectively reached an agreement on all material
aspects of the proposition, and therefore consummated by the process of offer
and acceptance.