Agreement is Contractual – Understanding the Basics
Agreement is the foundation of any contractual relationship. It is a mutual understanding between two or more parties, where they agree to fulfill certain obligations and expectations mentioned in a contract. The terms and conditions of the agreement are legally binding, and any breach of those terms can lead to legal consequences.
In this article, we will discuss the basics of an agreement and how it becomes contractual.
What is an Agreement?
An agreement is a mutual understanding between two or more parties to do or not to do a particular thing. It is a meeting of minds of the parties involved, where they agree on certain terms and conditions. These terms and conditions may be express or implied.
Express terms are those that are stated clearly either in written or verbal form. For example, when you sign a lease agreement, the terms regarding the duration of the lease, the amount of rent, and other conditions are explicitly mentioned.
Implied terms are those that are not expressly stated in the agreement but are expected to be understood by the parties. For example, when you hire a professional to do a job, it is expected that the work will be done with reasonable care and skill.
When does an Agreement become Contractual?
An agreement becomes contractual when it is legally enforceable. In other words, when the parties involved agree to perform certain obligations, and those obligations are backed by law, then the agreement becomes contractual.
For an agreement to become contractual, it must fulfill certain requirements. These requirements are:
1. Offer – One party must make an offer to another party for a certain consideration.
2. Acceptance – The other party must accept the offer without any changes to the terms of the offer.
3. Consideration – Both parties must exchange something of value, which can be in the form of money, goods, or services.
4. Intention to create legal relations – The parties must intend to create a legally binding relationship.
5. Capacity to contract – The parties must have the legal capacity to enter into a contract, which means they must not be minors, mentally incapacitated, or under duress.
Once an agreement fulfills these requirements, it becomes a contract, and the parties involved can legally enforce its terms and conditions.
Conclusion:
Agreement is essential in any contractual relationship. It forms the basis of understanding between the parties involved. An agreement becomes contractual when it meets certain legal requirements, and the terms and conditions mentioned in the agreement become legally binding. It is important to understand the basics of agreement and contract to avoid any legal consequences in case of a breach of the terms and conditions mentioned in the contract.