The requisites of a valid contract are the elements or details it must possess in order to be enforceable under the law. Contracts are a normal part of the everyday business world, and they're agreements that are legally enforceable. All agreements are considered to be contracts as long as they are made with the requisites in place, such as freely consenting parties who are competent to form a legal contract, for legal purposes.

Unresolved Contract Disputes

Misunderstandings regarding contract law sometimes cause conflict between parties. These misunderstandings are the cause of many contract disputes that end up in court. In court, the judge decides whether there was a valid contract between the parties or not. Contracts exist between partners, vendors, and employees. However, business owners don't typically keep an attorney on retainer to review each contract encountered. Understanding the basic details that make a contract valid can help you avoid finding yourself in a legal dispute that escalates to the court.

Essential Parts of a Contract

For a contract to be valid, there must be several key factors. These include:

  • An offer: One party must make an offer. Without an offer, there can't be a contract. This rule has been in force since 1950 when the Contracts Act passed. An offer, an advertisement, and an option are not the same thing.
  • Two or more parties with the capacity to enter a contract: There has to be at least one party with the legal capacity to make the offer and another with the capacity to accept it before an enforceable contract can be formed.
  • Acceptance of the offer: The contract can't become legally binding before it has been accepted.
  • Consideration must be exchanged: Each party to the contract must give something of value for the agreement to be valid.

Offer and Acceptance

At the time of making an offer, the party hearing the offer must understand what is being asked for and offered. Acceptance must follow the offer after the party hearing the offer is clear on the terms and conditions. If the terms are still being negotiated, it can't be considered an acceptance of the offer, and there is no contract during the negotiation stage. The offer can be accepted by the second party in either written or oral form.

Reasons the Court Considers a Contract Invalid

Only very serious matters cause the court to treat a contract as invalid. Those reasons are:

  1. It was formed in error: It's rare for the court to rule a contract is invalid due to error. Errors are considered to be things like entering the contract by mistake, but the court's usual rule is buyer beware. These errors can include factual errors, legal errors, and personal errors. These types of contractual errors are difficult to prove.
  2. It was formed under the threat of violence: This is less challenging to prove to the court than errors, and the violence can be threatened, perceived, physical, or moral in nature. Also, the threat doesn't have to come from the other party in the contract. There just has to be violence that pushed the person into the contract.
  3. It's fraudulent: When one party lies to get the other party to enter into a contract, that's fraudulent, and it makes the agreement void.


Consideration is another important aspect of a valid contract. It's the price that one party pays to the other in exchange for whatever thing has been offered in the contract. The agreement isn't legally enforceable as a contract unless each party gives and receives something. This is a vital part of any contract in order for it to be enforceable.


The parties involved have to have the capacity to legally enter a contract. This applies to both legal and mental capacity. Almost everyone is able to enter into a binding contract, with the exceptions of:

  • Minors under a certain age
  • Mentally incapacitated people
  • Legally interdicted people, such as someone who has filed bankruptcy

Older minors, up till age 18, can enter contracts but can change their minds at will and legally walk away from the deals. When someone isn't able to enter into a contract, there are regulations about who may enter into a contract on their behalf.

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