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Understanding the basics of contract law is helpful when forming any contract. A contract should outline the terms and conditions of the agreement between the parties. 

However, some situations often arise that make it difficult to define the terms clearly. For major transactions, it is prudent to have an experienced contract attorney review the agreement’s language before signing it.

In this article, you will learn about essential factors that make a contract valid. They include the following:

Intent of the Parties

When a business or individual signs a contract, both parties should expect to fulfill the terms of the agreement without fail. It is important to understand that a signed contract is legally binding. Before signing a contract, both parties should clearly understand the details and expectations.

A contract is not valid if the parties’ intention is unclear. For example, if a customer signs a contract with a dry cleaner, the intent is to have clothing cleaned at a reasonable price. However, if the business sends the customer a bill for work they did not request, they are not obligated to pay for the extras.


An offer is an essential element in any legal contract. If the agreement is valid, it should have a clear offer and acceptance. The offer in the agreement should be clear to both parties involved. This includes a description of the terms and considerations included.

A valid offer should not have any conditions or terms that have not been discussed with the other party. If the terms of the offer are changed or modified without the party’s consent, the offer becomes null and void.


Another essential element of any contract is consideration. This is a subjective issue that a court of law may determine. In essence, consideration is the price paid for the mutual obligation of the parties to fulfill their end of the bargain. In the case of a sale of goods, the buyer provides money, and the other party offers the goods—this is a clear example of consideration.

However, a contract between a landlord and tenant would not involve consideration since there is no exchange of money. This type of contract is known as a lease. In this case, the tenant pays rent to have the right to live in the property. Both parties should expect to fulfill their obligations under this type of agreement.

Promises and Actions

When a contract includes promises, the parties involved must carry them out, especially the one who made the promise who should follow through with it. The same holds for the other party. In the case of a lease, the tenant should pay the rent and make the property habitable.

If either party fails to adhere to the terms and conditions of the contract, the other party can take legal action. One of the parties may take the matter to court to enforce the agreement.

If a party makes a false promise in a contract and the other relies on it, it can be considered a breach of contract. However, it may not be a breach if the party who made it was ignorant of the fact that it was false or was not committed to following through with it.


When you enter into certain types of agreements with other individuals, you must understand the steps of a valid contract. A contract should be clear, concise, and legally valid. However, it is a good idea to have an attorney review the agreement on your behalf before signing it.

If you need an attorney at law in Birmingham, turn to MHM Firm. We are experienced in business litigation, medical malpractice, insurance defense, and more. Contact us today.