In order to form a contract, five distinct aspects must be present. The first is that there must be consideration. The offer and acceptance of contracts is often referred to as an agreement.
Consideration in a contract does not apply if the contracted act is something legal prohibited. For instance, a contract cannot be entered into if the consideration of one of the parties is to kill another person, because the killing of another person is not normally a legal right.
Contracts can only be enforced legally if the parties involved in them are believed to have wanted the courts to become involved in them at the time the contract was created. Two parties who claim they are entering a “gentleman’s agreement” are usually not considered to have entered into a contract.
A contract cannot be considered to be valid unless both parties to the contract have the legal capacity to enter into the contract. Legal capacity has several elements. The first is that both parties must be of sufficient age to be considered above the age of majority. While a minor may become a party to a contract, they can disaffirm any contracts they enter into at any time. In the event a minor party to a contract disaffirms the contract, the minor must forfeit any goods they received.
Recently, minors voiding contracts have been held responsible for returning the items covered in the contract in the same State they were granted, as are adults. Of course, the minor is only responsible for returning the consideration if it is currently in their possession.
The final requirement to creating a contract is that there must be a formality to inform both parties that the contract is in effect. The formality, however, is not standardized. It may involve affixing signatures to a written contract or shaking hands to formalize a verbal contract.