A consensual contract is a contract that is founded on the mere unanimous agreement of interested parties and doesn't need to be implemented through an official procedure.

Consensual Contract Overview

In Roman law, a consensual contract was in four forms in which unofficial consent alone was enough. They are the following:

  • The agreement of an agency
  • An agreement of partnership
  • A sale
  • Hiring or letting

An everyday example of a consensual contract is the contract of buying and selling. That is because the moment the seller and buyer agree on a price for an item to be sold and bought respectively, the seller and buyer have mutual actions. However, this is slightly different with lending and borrowing, because until the loaned item or amount of money is handed over, there's no action taken. There may have only been consent.

Real Contracts

A real contract is an agreement between interested parties to carry out (or refrain from carrying out) a duty regarding a real property. They are contracts in which monetary or other property exchanges are made between contracting parties, and they require more than mere consent. The phrase “real contract” originated from Roman law, and was used in reference to contracts concerning personal and real property alike.

Valid Contracts

Under state and federal laws, a valid contract is enforceable and has every required element. A valid contract has two basic elements: offer and acceptance. One party offers the contract by spelling out its terms, and the other party accepts (typically in writing). Sometimes it takes time for the other party to accept because acceptance is the endpoint of the negotiation process, which could last for a while.

Also, the purpose of the contract must be lawful, and all parties must accept the terms of the contract, be old enough to give their consent, and be mentally capable of understanding and abiding by its terms. A binding contract must hold a value or price that passes from one party to the other. Value isn't limited to money. It can be an interest, right, or benefit. Contracting parties in a valid contract must profit one way or another. For example, when a party sells their car to some other party, the seller gets money and the buyer gets the car.

Agreements are oral and can be enforced. However, some contracts aren't valid unless they're put in writing. Ideally, agreements involving a huge amount of value or real property, debt, or contracts that won't be effective for a long while, such as a will, should be put in writing.

Void Contracts

A contract is valid only if the agreement is consensual, lawful, and supported with a promise of value. It also must be executed by parties who are old enough and are mentally capable of understanding and upholding the terms of the contract. Otherwise, it's void.

A void contract can't be enforced under federal and state laws. If someone is hired by an employer and the terms of the employment include illegal job descriptions, that's an example of a void contract. Such a contract is void because it goes against the law and isn't in compliance with the elements of a valid contract.

These contracts are null from the outset, and neither party is bound by its terms. Think of such a contract as one that isn't recognized by the law and can never be enforced because it lacks the elements of a valid contract.

The following are some reasons that make a contract void:

  • If a party wasn't sound-minded when signing it
  • If a party wasn't old enough to give their consent
  • If its terms are impossible to uphold
  • If it restricts a party's right(s)

Voidable Contracts

A voidable contract, on the other hand, is valid and can be enforceable under certain circumstances if all involved parties agree to move forward. Any given party can accept the terms of a contract, while any others can oppose the terms for legal reasons as they see fit. So, if the opposing party or parties insist(s) on not accepting the terms of the contract, it becomes voidable.

A contract can be voidable for the following reasons:

  • A party was compelled or threatened to sign it
  • A party was unduly influenced to sign it
  • Its terms were breached
  • Parties were mistaken about its terms
  • It's fraudulent
  • It has false statements

If you need help with a consensual contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.