The Deal

• A contract must have an offer by one party and an acceptance by another party. A common example exists between a financial lender who issues credit cards to consumers. In order to receive the card, the consumer must sign a contract that defines the deal; the company will provide the card and the initial money to make a purchase and the consumer will reimburse the lender, with interest, for the privilege of using the card. The credit card advertisement in your mailbox is the offer---when you sign it, you've provided the necessary acceptance.
  
  

Intent

• Both parties must enter into the agreement with the intent of binding themselves to the terms of the contract. Unfortunately, some agreements are verbal, and those are often the hardest to enforce. For that reason, some states require contracts to be in writing, to ensure that both parties legally intended to enter into the deal.
  
  

Consideration

• A contract is not legal if there is no consideration of value. Each party to the contract must receive something of value. Consideration is usually money but it can be anything of value, a cow, a car or even the promise to perform work for the other party. Our judicial system enforces contracts and if no consideration is found for one party, a judge may throw out the agreement.
  
  

Parties

• All parties to a contract must be legally able to participate in the deal. In the United States, a child under the age of 18 is unable to enter into a contract. In addition, a person must be of sound mind in order to participate in a contract and no coercion may take place. All parties must enter into the contract of their own free will.
  
  

Legality

• All parts of the contract must fall within the boundaries of the law. If a contract involves an illegal act, it is not enforceable. You may enter into a contract to sell your car for money but you may not sell it in exchange for illegal drugs. The contract must not commit another person who is not a party to the contract. For instance, a parent may not sign a contract that forces his son to work for a third party.
  
  

Remedy

• The courts provide legal remedy for breaches of contract. In civil court, one party to a breached contract may sue the other party for "specific performance," a legal ruling that orders the defendant live up to his end of the deal.
  
  

Warning

• Read the fine print before signing any contract. Once you sign it, the courts assume that you took the time to read it. If you are in doubt as to the extent of the contract's terms, consult an attorney who is well versed in contract law to examine the document before you sign it.