What is valid?
Valid is a legal classification. To say that a contract is valid means that the contract is authorized, binding and enforceable by law.
There is no particular format that a contract must have to be valid, but certain requirements (elements) must be met.
What are the elements of a valid contract?
o All parties involved must be legally competent to enter the contract (of legal age and mentally competent at the time of entering the contract) and consent to entering the contract.
o The contract must have a legal purpose (a contract is not legally valid if it’s stated purpose is illegal)
o The contract must be an agreement by offer and acceptance (that which is offered by the issuing party is accepted by the consenting party, for example the buyer makes and offer to buy the property and the seller accepts that offer) Although verbal contracts are sometimes acceptable, a valid contract is preferably in written form and signed by all parties involved
o The contract must specify consideration, meaning that which is offered and exchanged in the contract. In most real estate transactions, the consideration is money.
When a contract is valid, it becomes legally enforceable, which means that, on the basis of that contract, all parties involved can be legally obligated to do what the contract states is required of them.
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