A contract must have 5 key elements to be legally binding:
1. A legal purpose
The offer and acceptance of a contract must be provided for under legal conditions. The contract can not be valid if the conditions of the offer are outside the law. For example, hiring a stolen cargo transportation is not legally accepted, which renders the contract invalid and unenforceable.
2. Mutual acceptance
A contract must be accepted in full by both parties, which is known as “meeting of minds”.
The offer and acceptance must occur in accordance with the conditions established by the parties, and fully accepted by everyone in the transaction.
Each contracting party must accept that it has value, and that value has a counterpart. The value of the contract is assumed by the contracting party that accepts the proposal.
4. Voluntary acceptance
Each party to the contract must accept it freely. The offer needs to be clear and all parties are aware of their obligations spontaneously.
5. Competent parties
The parties to a contract need to be able to hire. Restrictions such as age, mental state, use of substances that can alter understanding make a contract ineffective.
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