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Q.What are the key elements of a binding contract?
A.For a contract or promise to be binding there must be: (1) competent parties; (2) consideration; and (3) mutual assent (a meeting of the minds). The first element, competent parties, means that each side must have the capacity to enter into the contract. A court generally will not hold a minor, drugged impaired or mentally impaired person to a contract, unless it is for a necessity of life (e.g., food, clothing). The second element, consideration, is the bargain for exchange. That is, each party must give up something of value (e.g., money, property, a right, a valid claim, or promise to do something the person is not required to do). The third and final element required for there to be a binding contract is mutual assent. This is where both sides clearly understand the essential details, rights, and obligations of the contract. Mutual assent will be lacking if: (1) one party is obviously joking or bragging, (2) there is no actual agreement, or (3) both sides have made a material mistake as to the terms or details of the contract.
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