Contract Formation and Performance

 

Introduction

A contract is a legally binding agreement that governs the rights and duties of the involved parties to the agreement. The formation of a contract requires an offer, acceptance, consideration and a contractual capacity to come together and each party should be in a position to enter that contract. Contract performance is the act of doing that which is required by a contract.

Individuals should not be held to agreements if they did not know about them. This is because a valid contract that is enforceable under the state and the federal laws should have an offer and an acceptance (Miller & Jentz 2008). This is whereby one party makes an offer for example selling goods or services at a certain price. The other party accepts the terms and conditions of the offer and acceptance is often done by providing a signature or making a payment. A valid contract requires consideration. This means that any promises that are made by the parties have to be supported by a gain or something that is of value for consideration.

A contract should have a contractual capacity. Both parties getting into the contract according to the law must possess characteristics that make them qualified to be competent parties (Miller & Jentz 2008). This means that the involved should have a complete knowledge of the nature and impact of the contract. In terms of legality, the purpose of the contract should be to achieve an objective that is legal and one that is not against the general guidelines. The subject matter of the contract should not be illegal.

Conclusion

A contract is an agreement that involves two parties and if one party is not involved then it becomes invalid.  It typically involves the exchange of money, goods, services or promises. In order for it to be valid, the parties have to follow the contract formation and performance guidelines. Each party has to know the kind of agreements they are getting into and their impacts. Contracts should have goals that are legal.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Miller, R. L. R., & Jentz, G. A. (2008). Business law today: The essentials: text & summarized cases--e-commerce, legal, ethical, and international environment. Australia: Thomson/South-Western West.