Most contracts are based on common law elements. The elements of most basic contracts are:

1. Offer
2. Acceptance
3. Consideration.

In order to determine whether a contract exists, understanding of these elements are needed.

Offer

An offer can be made to pay or sell a piece of property, an idea, or any item that can be transferred.

As long as the offer is serious and confers a benefit that is not in jest, the acceptance of the offer by a potential buyer would constitute a binding contract, provided the following elements of the contract have been met.

Make certain that you give careful thought to the terms of an offer, before making one. Likewise, you should give careful thought to acceptance prior to accepting a benefit offer.

Acceptance

With certain exceptions, contracts can be oral and accepted only orally. Thus, when you accept, be sure to do so in the same mode as the offer was made, or preferably in writing so a record is made.

Two other actions may affect acceptance: (1) The offer is rejected; or (2) The offer is withdrawn before acceptance.

Rejection

An offer may be rejected in at least two ways: (1) By simply rejecting the offer; or (2) By making a counter offer. Like an offer, a counteroffer, if it confers a benefit, can be legally accepted, and if made prior to withdrawal or rejection constitutes a binding contract. Thus, you should make a counteroffer only if you are willing to have the counteroffer accepted.

Withdrawal

An offer may be withdrawn at any time, so long as the withdrawal is communicated to the potential offeree, the person to whom the offer is made, prior to acceptance by this person.

Consideration

For an offer and an acceptance to constitute a binding contract, there must be valid consideration. Consideration means something of value must be given to one party in exchange for the object of the offer. Otherwise, you have made a gift and gifts can be withdrawn at any time.

Usually consideration is in the form of money, but it can be many things. Courts will usually go out of the way to find consideration. Also, courts will not measure the adequacy of consideration. That is, they will not determine whether the offeree paid adequate compensation for the item received. So long as there is sufficient consideration, that is, something given up by the offeree, the deal will usually stand.

Mutual Assent

There must also be a "meeting of the minds" or mutual assent, to have a contract. If each party is talking about a different item, then there is no mutual assent, and there is no contract even if all the other items to form a contract are present.

Typical Contract Terms

All of the terms for any contract do not have to be present, or discussed. Just because a particular term does not exist, or was not discussed at the time the contract was made, does not mean the contract is voidable. The court will imply "reasonableness" to determine the meanings of terms which are not present in a written or oral contract.

The limit is that some significant terms must have been discussed, or there may be no "meeting of the minds." For example, usually "price" is a key issue. Generally, if the parties did not discuss the price, or did not agree on a price, courts may not be willing, absent evidence that the price was obvious, to imply a price. Thus, when it is apparent to the court that some terms were discussed, the court may fill in the blanks with a determination of what is reasonable. Be careful not to take the position that a contract can be broken just because one minor item was not agreed to by the parties.

GENERAL RULE

Don't Sign, Accept, or Offer unless you are serious. Generally, contracts are serious business and cannot be broken, except in very special circumstances.