Week Three Discussion Questions

What are the essential elements necessary to form a valid contract? Provide examples of each. Under what conditions can contractual duties be modified? When does promissory estoppel apply? Provide an example.

The parties involved in the contract must first achieve mutual assent for a contract to be valid. Meaning they must agree upon what is offered and accept the offer. For example, if one party offers specific payment terms for specific services the other must accept these terms for the contract to be valid. The next element is support by consideration. Consideration differentiates between binding and nonbinding promises within the contract. Binding promises are those that create a legal detriment by giving up or exchanging something of value. Nonbinding promises are those that have not been considered in the contract, such as cost of weather delays for a service that is not discussed within the contract. Then the parties must have capacity. Capacity refers to the ability for the party to make proper decisions. Minors and mentally incapacitated parties are considered to not have the proper understanding of contracts thereby invalidating it. Finally the contract must contain subject matter and performance that is legal and follows public policy. This means the contract must not be related to any illegal activity or violate any specific public policies. A contract between two parties for murder is one example of illegal activity.