A valid or enforceable agreement
A valid or enforceable agreement formed between two parties is referred to as a contract. If the two parties reach an agreement that includes all of the elements required by law for a legal contract, the agreement is deemed to be legal or legitimate; otherwise, the agreement is deemed to be invalid. (Mitchel, 2013).
A contract may be verbal or formal
The majority of agreements are made verbally, but there are some circumstances where it may be necessary to make an agreement in paper to guard against fraud. If there isn't fraud, then an informal contract is in effect. A contract must have a legal purpose for it to be held legal. The agreement between Jim and Laura and the car seller is deemed legal because the purpose of them buying a car is to enable their movement to school and work because the one they currently use developed some mechanical problem. Hence it has a legal purpose because it is not a crime to use a car to go to school or work.
A legal contract must have an agreement between the two parties
Both parties must agree to the terms that are related to the contract. This involves one party extending an offer to which the other party must accept for an agreement to exist (Zanarone, 2013). In the case of Jim and Laura, there was no agreement on the price of the car instead they only gave Stan the salesman $100 to hold the vehicle as they figure out on how to acquire it. This lack of agreement between the two parties led to Jim and Laura deciding that they wouldn't buy the car even without the seller's consent.
Consideration is another element of a legal contract
Each of the parties must agree to deliver something that is valued at an approved cost in an exchange with another that is beneficial to them (Fried, 2015). Jim and Laura's case did not have any consideration because they were supposed to give Stan an amount that would be useful to him if he gave them the car, but this did not happen as they only gave him $100 to hold the vehicle which later they came demanding after they changed their minds on the purchase. This was also because they were not even aware of the total cost of the car.
A legal contract must also constitute competent parties
The parties must be of sound mind and must not be under the influence of any drugs that might control the way they give their consents (Mitchel, 2013). They must also be of legal age bracket because a contract with a minor or insane individual cannot be considered legal. Most states have their legal age of entering into a contract as 18 years old. In the case of a corporation, there are chosen agents or authorities that are held responsible in case there are debts or problems with breach of contract.
There must be the genuine assent of the two parties
The agreement between the two parties must be one that is freely made without any fraud. Like in a situation where one agrees to sell his house to the next-door neighbor at gunpoint at $2 is not a legal contract because the assent is not genuine since the seller makes the agreement because of fear of being short, hence the contract is not valid.
A lot of contracts do not need to be in writing
But there are a few cases in which the contracts must be in written form or signatures. This is often required in agreements that involve selling a house or a car or one which involves selling and buying land (Zanarone, 2013). It has proved useful for the agreeing parties to sign required papers contained the terms and conditions that the two parties have agreed upon and consented. This is always attached to any relevant document of the agreement and kept by any of the parties. A written contract is always important when disputes arise concerning the property or the agreement. In the case of Jim and Laura, there was no valid contract.
This is because an automobile is among the properties that require a written document to prove the existence of the contract
But the two parties did not sign any nor did they agree on any terms and conditions of the purchase of the car. The seller only points out to the buyers when they demand their $100 that the seller had set to be the deposit for holding the car and that it would be refundable that the money is not refundable and would be used as part of the cost of purchasing the car. Here the seller is trying to manipulate the buyers into buying the car by force by setting the holding money to be part of the cost price of the car so that he does not return it to them since they have decided not to purchase the car.
Reference
Zanarone, G. (2013). Contract adaptation under legal constraints. Journal of Law, Economics, and Organization, 29(4), 799-834.
Mitchell, C. (2013). Contract Law and Contract Practice: Bridging the Gap Between Legal Reasoning and Commercial Expectation. Bloomsbury Publishing.
Fried, C. (2015). Contract as promise: A theory of contractual obligation. OUP Us.
