What are the main parts of a valid contract?
Agreement
Agreement as a part of contract includes offer and acceptance. Acceptance is an expression of unqualified agreement to all the terms set out in the offer. An offer is an expression of willingness to contract on a specific set of terms. The importance is those sets of terms let both sides plan. An offer may be withdrawn at any time before it is accepted.
Does silence mean acceptance? Generally silence is not acceptance and the offeror cannot impose the offeree to speak. But there are exceptions: 1) the offeror says nothing 2) the parties mutually agree that silence means acceptance 3) in previous dealings the parties considered silence to be acceptance.
e.g. A man wants to rent conference room in a hotel for an event. He calls to the hotel and asking if there is available room on needed date, are meals included etc. When he has finally chosen the date and room this fact allows him and the hotel manager plan. He can think over what to buy for a lunch, how many guests to invite and so on. Hotel manager will book the room for him so other clients will know that exact room on exact date is not available.
Consideration
Consideration is the concept of legal value in connection with contracts. It is anything of value promised to give to another when making a contract. It can be money, physical objects, services, promised actions and much more. It is based on QUID PRO QUO (something for something). The mutual promises must be real but not illusory. A promise to do what somebody already agreed to do or carry moral obligation is not consideration. Moreover, the importance is that consideration makes you privy to the contract and privity lets you sue. But no one who is not within the contact can sue parties.
e.g. A young couple decided to marry and their fathers agreed to give them exact sum of money monthly. But, unfortunately, father of the lady died and angry fiancé wanted to sue. It could not be so because according to the law, as I already mentioned, no one who is not within the contract can sue parties.
Intention
An agreement will only become a legally binding contract if the parties intend this to be so. This will be strongly presumed in this case of business agreements but presumed otherwise if the agreement is of a friendly, social or domestic nature. (BPP, page 102) The importance is that it protects the weaker party and prevents sales introducing unfair terms.
e.g. The husband had left house which was owned by him and his wife. And they agreed if she pays the entire mortgage she will own this house by herself only. The wife made the husband to sign up to prove their agreement. The wife paid off the mortgage but the husband refused to transfer the house to her. Then she went to the court and she won this case because there was a written evidence of their agreement.
Capacity
Capacity refers to the fact that the law regards some groups as being unable to enter into contractual arrangements, because they might not be in a position to fully understand the agreement they have entered into. (BPP, page 106)
There are 3 categories that lack capacity to make a contract:
Minors
Insane
Intoxicated
The importance is that capacity protects minors from being taken advantage of. The legal capacity of minors is determined by the Minors` Contracts Act (1987). In most states both parties must be at least 18-year-old to make a legal agreement, but some states set the minimum age at 21. The adult party is bound by the bargain, the minor is not. If one of the parties is under the age 18, this party has a right to declare the contract void. Disaffirmance is a cancellation of a contract made during ones minority. A minor is responsible for his torts to a very tender age, but his parents are not responsible for the torts of a minor.