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The best way to make sure that an agreement is legally binding is to sign a contract. It allows you to go to court if your contracting party is not following the terms of the agreement. However, there are certain instances that make a contract unenforceable. This article will outline the elements of a contract that need to be followed for it to be enforceable and situations where a contract is not enforceable.

What Is Needed for a Contract to Be Enforceable?

For a contract to be enforceable, several elements are needed. These are:

  • offer;
  • acceptance;
  • consideration;
  • intention; and
  • certainty.

Before a binding contract can be enforced, all of the elements must be satisfied.

Offer

An offer is an initial willingness to contract that one party (“the offeror”) makes to another party (“the offeree”). There are several ways that you can convey this, including:

  • written;
  • spoken; or
  • electronic.

A contract would be unenforceable on this element if the offer was not made to the correct party or was unreasonable.

Acceptance

Acceptance is confirmed when the other party agrees to form the contract with you. This can be express or implied. After acceptance has been given a legally binding contract forms. However, other elements can still make the contract unenforceable. If the offeror states that the acceptance must be communicated in a certain way, then that must be followed for there to be valid acceptance and therefore form an enforceable contract. There may also be a time limit on the offer, and if this is not met, then the contract is unenforceable. 

There are exceptions to this rule, such as the postal acceptance rule. If you post your acceptance to an offer, this exception applies. In this case, acceptance is counted from the day it is posted rather than when it arrives. 

A person is required to be of sound mind to give acceptance. This is defined as the state of a person’s mind which is adequate to reason. Therefore, they cannot be inebriated or have any issues that may cause them to be affected. 

Consideration

Consideration is a thing of value that is delivered in exchange for a promise. This can be payment or a promise to conduct a service. Without sufficient consideration, a contract will not be enforceable. A contract without consideration is a gratuitous promise. This is usually the most contentious element of the contract and is the one that makes a lot of contracts enforceable. Any contract you form must have sufficient consideration in return.

Intention

There must also be intent on either party for the contract to be binding when the contract is formed. If a party did not intend for the contract to be binding, the courts could rule the contract unenforceable. For example, if you reply to an email without knowing that the email had a clause stating that replying is acceptance, the other party cannot hold you to enter into a contract. This is because you did not intend to accept or enter into a binding contract. However, this does not mean a party can go back on what they previously intended. If the other party intended for the contract to be binding from the start, but later on change their mind, then the courts will still rule it enforceable. 

Certainty

All the terms in the contract must also be specific for a contract to be enforceable. If any of the terms are ambiguous, then the courts may rule the agreement non-binding. Indeed, if a contract is too vague, then it would be hard to enforce. The threshold for a term to be ambiguous is not very high, so any provisions must convey their proper meaning. 

Key Takeaways

Even if both parties agree to form a binding contract, there are still situations where the contract can be considered unenforceable. This is if there is not a valid offer, proper acceptance, sufficient consideration, intention, or certainty.

It is always best if the contract is written down, even though there are several ways for a contract to be binding. Indeed, a written contract makes it is much easier to argue the terms of the agreement if there is a dispute. Always make sure that there is proper acceptance if you intend to enter into a binding contract. People often believe they have accepted a contract when they have not accepted it according to the terms stated in the contract. Inversely, many people may unwittingly enter into a contract without thinking they have accepted it. However, this would still be legally unenforceable as they have not intended to enter into the contract.

If you need any legal assistance with contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Does my acceptance have to be exactly the same as what is stated?

The courts will use their discretion if you have accepted the contract in a very similar way. They are also more likely to find it binding if the acceptance given was unreasonable.

Does consideration have to be money?

No, it can be a promise to do something or a promise not to do something. It can also be a promise to provide something.

Can contracts be changed to make them enforceable?

Yes, but only if all the parties agree to the new modified version.

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