Valid Contract Unit 3 IP
Penelope Manzo
BUSN310-11-2B-06: International Legal and Ethical Issues in Business
American Intercontinental University
James Lange

Valid Contract
A valid contract is an agreement that is backed-up by the courts. The contract is valid if it meets all four elements, which includes: an agreement, valuable consideration, competent parties, and legal purpose. The agreement must be a compromise from both parties, and the intention of all terms of the contract must be agreed upon from both parties. Before the contract can begin, both parties must make clear each intention, detailed, and both parties must have a clear understanding. The agreement must have an offer and an acceptance, which must include both parties. Next, a valuable consideration, in which each party are required to give up something of value or refrain from exercising a legal right in an agreement, such as the initial agreement. The third element, competent parties means all parties must possess the legal capacity to enter into the contract. This means the state jurisdiction must be met, all party members must be of legal age within the state, and must be of mental competence. Lastly, legal purpose, the contract must have a legal purpose and not contrary to the public policy. These four elements must be agreed upon and meet before a contract becomes valid.
According to US Legal Definitions, Objective theory of contract is a “doctrine which states that a contract is not an agreement in the sense of a subjective meeting of the minds. However, a contract is instead a series of external acts giving the objective semblance of agreement. This principle states that the existence of a contract is det ermined by the legal significance of the external acts of a party to a purported agreement, and not by the actual intent of the parties” (US). Objective theory of