Michimich.com - Muller Law Firm Explains the Basics of Contracts

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BIRMINGHAM, Mich. - Michimich -- Are you familiar with the basics of entering a contract?

Do you know what makes a contract valid or invalid?

The five essential elements to a contract are offer, acceptance, consideration, mutuality, and legality. The process of negotiating a contract starts with the offer, an invitation to enter into a binding contract. The person making the offer is the offeror, and the person receiving the offer is the offeree.

"Acceptance" occurs when the offeree states either that the offer is accepted or takes action that indicates acceptance. Typically, you want to accept in an unambiguous manner. If you want to accept an offer but you're unsure how to do so, simply use the same mode of communication that was used to convey the offer. For example, if the offer came by mail, accept with a letter.

"Consideration" is the bargained-for exchange, value for value. In most business contracts, consideration to the offeror is the promise to pay money for the offered goods or services, and the promise of delivery of those goods or services is the consideration to the offeree. It's not ordinarily a defense that somebody didn't negotiate a good bargain as long as an exchange occurred.

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"Mutuality" refers to the fact that both parties are bound to do something, or to permit something to be done, for the contract to be valid. For written contracts, this concept has faded somewhat in modern jurisprudence. It's now most likely to arise in the context of a claim of an implied contract, where one party claims that a course of conduct or dealing with the other party creates a contract, but the other party denies the existence of a contract.

"Legality" concerns whether the subject matter of the contract is legal. A modern example involves new national security legislation that forbids the international sale of certain computer technology. A contract for the sale of those chips, even though valid prior to the passage of the new law, could afterward become unenforceable on the basis of its illegality.

Read the full article on our website: https://www.mullerfirm.com/learnmore/michigan-debt-collections-contract-basics

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