Essential Elements of a Binding Contract Research Paper

Essential Elements of a Binding Contract - Research Paper Example The lack of experience in dealing in drafting legally binding contracts by businesses and individuals has promoted the occurrence of illegal acts in the administration and formation of contracts. In order to ensure that non-enforceable contracts do not occur in the future, both parties entering into a contract are required to take into consideration all the relevant requirements of a legal and valid contract. Definition of a Legal Contract According to Miller and Hollowell (2008), a contract is a legally binding agreement between two or more persons. The two parties agree on acts that will be refrained from or performed in fulfillment of a promise. Disputes from the contracts arise when one party refuses to fulfill their part of the promise made to another contracting party. The objectives of the contract theory are to show how a contract is formulated and enforced. The theory aims at describing and showing the intention of the parties to enter into a contract. The intention of the parties to enter into a valid contract is determined by an external party normally by the court of law. The courts rely on the words that a party said when he/she was entering into the contract, the actions of the party before he/she entered or what the appearance of the party looked like before entering into a contract. The law recognizes that the party entering into a contract that is valid must be based on free will. However, the law is responsible in regulating the freedom that an individual can enjoy from a contract. The law does not allow individuals to abuse the freedom to contract (Emerson, 2009). Parties in a Legal Contract The main parties to the contract include the offeror, offeree, and the government. The offeror is the party that agrees to deliver services or goods or services. The offeror is the party that agrees to accept the goods at the agreed consideration and the government acts as an agent to ensure that a contract is enforced. The main obligations of an offeror in a contract include specifications of the terms of the contract. The specifications should be enough and clear to enable the offeree to understand and accept the offer. For example, an offeror selling a house must specify the boundaries of the land holding the house and the price of the house. The offeror must specify the duration of the contract and the day that the contract will expire. The offeror reserves the right to revoke his offer in a valid or change the terms specified in a contract (Miller & Jentz, 2010). The obligations of the offeree are to accept the offer based on the requirements laid do wn by the offeror. Legally the offeree has a responsibility of paying the offeror the consideration they agreed upon. If any of the parties does not bind by the rules of the contract, there exists a breach of contract. The Role of a Third Party In a Legal Contract Collins (2003) states that, the role of the third party in a contract is to give a constructive notice or provide some kind of influence in the performance of a contract. However, the role played by a third party in the performance of a contract is limited. The third parties may be used to solve a dispute arising from a contract or a friend who passes important information to both the offeror and the offeree. The third party can also be a beneficiary who has the right to enforce a contract.