A Legal Purpose:
Parties cannot execute a contract to do an illegal act. The purpose of the contract must conform to the law. A contract between parties that involves fraud upon another would not be valid.
Legally Competent Parties:
The parties to a contract must all be legally competent to enter into an agreement. This includes being of legal age and mentally competent at the time of entering the contract.
Agreement by Offer and Acceptance:
In real estate this is illustrated by an offer to purchase a property by a buyer and the acceptance of that offer by the owner/seller.
Consideration:
Consideration is anything of legal value offered and exchanged in the contract. This could be money, services or other valuable goods. Love and affection is even an example of consideration in some contracts. The consideration must be spelled out in the contract.
Consent:
This element is the requirement that the parties to the contract have consented willingly and knowingly to the terms of the contract. There cannot be fraud, misrepresentation, a mistake or undue duress on any party to the contract.
When a contract is valid.:
A contract is valid if it satisfies all of the required elements. It then becomes legally enforceable, meaning that the parties can be legally required to perform per the terms of the contract.
Should a party to the contract not perform per the terms or by deadlines set forth in the contract, they would be in default and could be legally required to perform or pay damages to the other parties.
