Eight Essential Elements of a Common Law Contract

All of life is about contracts. Even the Bible is full of contracts. There is the Old Covenant (a Contract) and the New Covenant (a Contract).

Basic Rule 1: No contract; no obligation to perform.

Basic Rule 2: If a person or agency is demanding performance, DEMAND A CERTIFIED PRODUCTION OF THE ORIGINAL CONTRACT.

Basic Rule 3: Never presume. See, read, and study the contract. You are not obligated to accept any contract that is titled to the advantage of lawyer who makes up the contract for his client.

Elements of a Common Law Contract

There are 8 essential elements for the creation of a contract under COMMON LAW, and they are:

1. offer;
2. acceptance;
3. sufficient consideration;
4. intention to enter legal relations;
5. capacity to contract;
6. legality of purpose;
7. genuine consent; and
8. certainty of terms.

Four Absolute Essentials of a Contract

Typically, in order to be enforceable, a contract must involve the following four elements:

A “Meeting of the Minds” (Mutual Consent)

Contract requires you willing, voluntary, non-coerced consent. You do not have to contract  . . . and you should not enter into a contract with corrupt State officials.

Proverbs 1:10 My son, if sinners [lawyers, bankers, government agents, judges, attorneys, etc.] entice you, do not consent.

The parties to the contract have a mutual understanding of what the contract covers. For example, in a contract for the sale of a “mustang”, the buyer thinks he will obtain a car and the seller believes he is contracting to sell a horse, there is no meeting of the minds and the contract will likely be held unenforceable.

Offer and Acceptance

The contract involves an offer of some value to another party, who accepts the offer. For example, in a contract for the sale of a truck, the seller may offer the truck to the buyer for $10,000.00. The buyer’s acceptance of that offer is a necessary part of creating a binding contract for the sale of the truck. “Will you marry me?” is another kind of contract offer.

A counter-offer is not an acceptance, and will should be treated as a rejection of the offer. For example, if the buyer counter-offers to purchase the truck for $9,000.00, that typically counts as a rejection of the original offer for sale. If the seller accepts the counter-offer, a contract may be completed. However, if the seller rejects the counter-offer, the buyer will not ordinarily be entitled to enforce the prior $10,000.00 price if the seller decides either to raise the price of the truck or to sell the truck to somebody else.

Mutual Consideration (The mutual exchange of something of value)

In order to be valid, the parties to a contract must exchange something of value. In the case of the sale of a truck, the buyer receives something of value in the form of the truck, and the seller receives money.

While the validity of consideration may be subject to attack on the basis that it is illusory (e.g., one party receives only what the other party was already obligated to provide), or that there is a failure of consideration (e.g., the consideration received by one party is essentially worthless), these defenses will not let a party to a contract escape the consequences of bad negotiation.  For example, if a seller enters into a contract to sell a truck for $10,000, and later gets an offer from somebody else for $11,000, the seller can’t revoke the contract on the basis that the truck was worth a lot more than he bargained to receive.

Performance or Delivery

In order to be enforceable, the action contemplated by the contract must be completed. For example, if the purchaser of a truck pays the $10,000 purchase price, he can enforce the contract to require the delivery of the truck and its keys. However, unless the contract provides that delivery will occur before payment, the buyer may not be able to enforce the contract if he does not “perform” by paying the $10,000 upfront. Similarly, again depending upon the contract terms, the seller may not be able to enforce the contract without first delivering the truck.

In a typical “breach of contract” action, the party alleging the breach will recite that it performed all of its duties under the contract, whereas the other party failed to perform its duties or obligations.

Additionally, the following elements may factor into the enforceability of any contract: