For a contract to exist, several elements must be in place. Contract law includes basic concepts such as offer and acceptance.
In business law, there are a number of necessary elements courts look at to determine whether a contract is, in fact, a binding legal agreement.
Agreement
A valid offer and acceptance form the basis of an agreement. * Valid offer: One of the conditions is whether there was in fact a valid offer under contract law. * Acceptance: There also has to be acceptance.
Mutual Consideration
There also has to be mutual consideration in order to form a contract. Each party has to give something of value for consideration to exist.
Performance
There must also be performance under the contract.
Legal Capacity
The persons entering into the contract must have legal capacity to enter into a contract and do so in good faith. Also, the purpose of the contract must be legal.
Much of U.S. commercial contract law is now codified under the Uniform Commercial Code (UCC). Private organizations, including the American Law Institute and the National Conference of Commissioners on Uniform State Laws, analyzed common law precedents before drafting the UCC. The first draft of the UCC was adopted by most states in the 1950s and 1960s. The UCC is periodically updated to reflect current changes in law and to include new areas of law. The UCC has specific articles covering sales and leases of goods, negotiable instruments, bank deposits, funds transfers, letters of credit, bulk sales, warehouse receipts, investment securities, and secured transactions.
The UCC is particularly important for business in outlining the rights and responsibilities of buyers and sellers in commercial sales. Another important article sets forth responsibilities between banks and their customers in honoring deposits and checks. The UCC helps clarify and provide consistency in U.S.