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What are the elements of a contract?

As a Florida resident, you are party to numerous contracts whether you realize it or not. Everything you buy is the result of a contract between you and the seller. Every time you use your credit card to pay for a purchase you do so in accordance with the contract between yourself and your credit card provider. If married, your marriage is itself a contract between you and your spouse.

As the Judicial Education Center explains, every contract contains the following four elements

  1. Offer
  2. Consideration
  3. Acceptance
  4. Mutuality

Offer

At its simplest, a contract is an agreement between you and another person, both of whom seek to benefit from the agreement in some way. The contract negotiation begins, for example, when you offer to sell or trade something to him or her. Your offer could likewise be to do something for him or her or to refrain from doing something.

Consideration

Consideration is the thing or action you expect to get from the other person in exchange for your offer and which (s)he is willing to pay or do. Money represents the most common consideration in a contract, but anything else of value can be consideration as well. In a trade of goods, for example, you may give up one of your books that you have already read but your neighbor has not in exchange for one of his or her books that (s)he has read and you have not. While this specific example could be a mutually agreed upon loan, of course, if both of you agree that neither will return the “new” book to the other, that is a contract. Whether or not the two books have the same approximate money value is irrelevant. What counts as consideration is the value each of you places on owning the respective books.

Acceptance

Both you and the other person must evidence acceptance of the contract in some manner, such as one of the following:

  • Verbal acceptance: You both say something like “It’s a deal,” “That sounds great,” or “Let’s do it.”
  • Written acceptance: You both sign the written contract.
  • Action acceptance: You shake each other’s hand.
  • Performance acceptance: You both do what you agreed to do.

Mutuality

Mutuality means that you and the other person came to a “meeting of the minds” with regard to the contract. In other words, both of you understood what you were doing and willingly and voluntarily agreed to do it, and neither of you forced the other into the contract.

This is general educational information only and not intended to provide legal advice.

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