The intention of the contracting parties must be to establish a legal link between them. Social agreements, since they do not envisage a legal relationship, are not contracts. For example, if a father does not give the promised pocket money to his daughter, the daughter cannot sue the father because it was a purely domestic settlement. It is therefore clear that not all agreements that do not result in legal relations are contracts. Contracts are important business tools. This means that it is essential to establish a valid contract, as it ensures that all conditions are clear and that both parties are conscious, competent and capable of concluding a legally binding agreement. For a contract to be binding, both parties must first be aware that they are reaching an agreement. Often referred to as “mind encounters,” both parties must be active participants. They must recognize that the treaty exists and are free to be bound by the obligations of this document. If an agreement is reached between family members or friends and it is more of a domestic or social agreement, it is more likely that no intention to create legal relations will be found. In these cases, it should be noted that the parties intend to enter into a legally binding agreement.
Oral agreements are based on the good faith of all parties and can be difficult to prove. The conclusion of a contract must include elements of free will and a good understanding of what each party is doing. In other words, the consent of each party must be genuine. It is only when the essential element of the regular agreement has been granted that there is a contract that binds the parties. A contract is not mandatory if all six elements – offer, acceptance, mutual consent, consideration, ability and legality – can be proven. The actual content of a valid contract will vary depending on the object. There are, however, six elements that must be present in order for your treaty to be legally binding. If one of the following parts is missing, it cannot be forced. UNILATERAL VERSUS BILATERAL CONTRACTS: Most contracts are bilateral, that is, both parties agree and the four basic elements of a contract exist.
For example, B offers to buy A`s Automobile at a certain price, and A accepts the offer and agrees to give car B after receiving these specific funds.