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What are the elements of a valid contract?

On Behalf of | May 11, 2022 | Contracts |

Contract disputes are not unusual in the business world. One of the first things you need to do to prevail in a breach of contract lawsuit is prove an enforceable contract exists. A valid contract must consist of an offer, the exchange of consideration, acceptance and mutuality.


The offer is the first step in forming a contract. One party will promise to do or not do something for the benefit of the other party. Offers imply future performance.


The second step in forming a contract is an exchange of consideration. This means that after one party offers something, and the other party agrees to exchange for something of value. This could be a tangible object, a promise to do something or a promise to refrain from something. Consideration is different from a gift because a gift is given with no expectation of receiving anything of value in return.


The third step in forming a contract is unambiguous acceptance by both parties. Each party must clearly accept the terms of the contract. This acceptance can be in writing, orally, through action or through performing per the terms of the contract. Acceptance exactly reflects the terms of the contract. Otherwise, it would be considered a rejection of the contract and a counteroffer.


Contracts must have a “meeting of the minds” with regards to the terms of the agreement. Basically, each party to the contract must mutually understand and agree to the terms of the contract.

Breach of contract

If a party wants to prove breach of contract, they first must show that a contract existed based on the four above elements. If so, they have met their burden of proof. If a party wants to claim a contract never existed and thus cannot be enforced, they must show one of the four above elements is missing.

Courts in breach of contract cases will interpret the contract in its entirety and will go with the ordinary meaning of the words of the contract. Breach of contract lawsuits can be complex, and many who wish to bring one or have been served with one will want to seek assistance with their claim.