Elements of a Contract

The elements of a contract classify the legal obligations of parties

involved. They define methods of offer, acceptance, capacity of entering
parties and the value of transfer between them.
Mutual Agreement and Genuine Intention
Mutual agreement involves the acceptance of the offer by all parties of
the contract. Parties of the contract must have a genuine intention to fulfil
the rights and duties of the contract which becomes the crucial element in
determining the validity of the contract. The importance of genuine intent
by both parties radiates when both parties aim to fulfil their contractual
expectations whilst knowing that both parties of are gaining their intended
purpose and are not at a loss by completion.
With relevance to the construction field, a mutual agreement can entail
the relationship between the Owner and the contractor. Services are
agreed to be performed by the contractor and a accepted payment is
arranged by the Owner in exchange for the Contractors services.
Offer and Acceptance
The offer is equivalent to a promise made by a party to provide a service
in exchange for another promise of service from another party. An
acceptance with qualification can be communicated through the means of
written communication or even unspoken and implied actions. Outlined
conditions and specifications should only be accepted when there is no
intention to change the offer. Changing the offer can lead to termination
of the contract and refusal from the owner, who in turn can accept an
alternative offer made. The acceptance of a contract must be genuinely
entered without the influence of duress. The offeror exercises the freedom
to withdraw their offer prior to acceptance.
Bid bonds Guarantee the owner that the bidder whom the owner accepts
will enter the contract. If the selected bidder does not accept the contract,
charged damages will be paid by the bidder to the owner. If the bidder
cannot pay damages a surety company, on behalf of the bidder, may pay
the owner damage charges and collect these charges from the bidder at a
later stage.
Acceptance of a bid must be made in a reasonable time with a grace
period of thirty to forty-five days used as a reasonable measure.
However, the term reasonable is grey and is situation dependent.

Capacity
Capacity refers to the capability to make legally binding and imposable
contracts. Entering parties must not be influenced, under duress, impaired
and must have sound decision making ability. Infants, mentally disabled
and persons under dangerously pressured circumstances do not have
legal capacity to enter a contract.
Consideration
Consideration in a contract refers to the exchange of value between
parties. This value is not necessarily a monetary value and may also be in
the form of construction work or a promise to do or not to do something
i.e. the owner promises to pay the contractor extra if the contractor
promises to only work during off-peak hours of the day.
Object of a Contract or Lawful Object
The object or intention of the contract must be lawful and must be
performed in an agreed or reasonable time i.e. thirty to forty-five days or
as agreed. In plain, the exercised practices of the contract must not be
illegal i.e. the contractor must hire legal labourers in practices. Most illegal
work is recorded to be processed under change orders. This is why change
orders may be questioned to official scrutiny.