Elements of a Valid Contract

Contract terms and validity for Maryland residents

Maryland residents should be aware of the elements of a valid contract. From business owners to the average citizen, contracts are used by people in numerous aspects of professional and financial life. Few people understand the rules that apply to contracts or how to draft and interpret them.

A valid contract is simply one that is legally binding and may be enforced. Although a lawsuit is one possible means of resolving a conflict dispute, it is not a very efficient one in most cases. Contracts are written to clarify the terms of an agreement in such a way that prevents a contract dispute from turning into a lawsuit. A litigious solution to a contract dispute also removes control from the parties at hand and gives it to the court.

There are several types of contracts, including oral and written. Both may be legally enforced, depending on the laws in the state. All contracts include two or more parties capable of entering an agreement, the consent of the parties involved, an object or goal, and consideration. There are people, including some felons and minors, who are not legally allowed to enter a contract. Consent implies that all parties involved in a contract are operating freely and willingly.

The object of a contract is the matter that is being agreed upon, such as the sale of a business. Consideration is the final component of a legally valid contract, and it requires that each person or entity involved in the contract must gain something from the agreement. If only one party benefits from the contract, they may not have the terms of the contract enforced if the other party does not follow through. These elements can pose a legal gray area in many situations, and a business lawyer may provide assistance with clarification of a contract’s terms.

Source: Entrepreneur, “Is This Contract Valid?”, Jeffrey Steinberger, Jan. 12, 2015

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