As a North Carolina entrepreneur and business owner, you and your attorney likely spend a fair amount of time negotiating written contracts between your company and your various customers, employees, suppliers, distributors, etc. As you already know, a contract is a legally enforceable document — but only if you have included all the things necessary to make it a valid contract.
The Judicial Education Center explains that, regardless of precise nature, all valid contracts must contain the following four things, called elements:
An offer consists of whatever it is that one party to the contract intends to do for the other party, such as sell him or her something, do something for him or her, etc.
Consideration consists of whatever it is that the offering party expects to get from the other party in return for fulfilling his or her offer. Usually, the consideration consists of a stated amount of money, but it can also be something else.
Acceptance consists of both parties agreeing to abide by the terms of the contract. Acceptance can occur in one or more of the following ways:
- Written, wherein both parties sign the contract
- Verbal, wherein both parties tell each other that they accept the contract by saying something such as “It’s a deal,” “Let’s do it,” etc.
- Action, wherein the contract parties shake hands with each other, etc.
- Performance, wherein both parties do whatever it is that the contract calls for them to do
Finally, the contract parties must arrive at a “meeting of the minds” in order for the contract to be valid. In other words, both parties must understand the contract’s purpose and terms.
This is general educational information and not intended to provide legal advice.