Representing Businesses and Individuals in Chicago and Northern Illinois

Elements of a real estate contract

Contracts are an important part of most real estate transactions. Contracts are used to outline the rights and obligations of parties to an agreement. It is helpful for those parties to understand the elements of a contract, what makes them valid and how to enforce a contract. There are several elements of a valid contract to be familiar with.

Offer and acceptance

A contract begins with an offer for goods or services. The second element of a contract that must be met for it is be valid is acceptance of the offer. The acceptance of the offer must mirror the offer itself to demonstrate a meeting of the minds between the parties to the contract.

Consideration and capacity

A valid contract requires an exchange of something of value which is referred to as adequate consideration but that something does not have to be money. The parties to the contract must also have capacity to enter into the contract which refers to legal capacity and the mental and physical capacity required to contract. Legal capacity usually requires that the contracting parties are over the age of 18.

Intention and undue influence

The parties to the contract must intend to enter into a contract and there must also not be any undue influence, coercion or duress in the formation of the contract for it to be considered valid.

A breach of contract occurs when a party to the contract fails to fulfill their obligations as required by the contract which can disrupt a deal. Contract law and real estate law are areas of the law that can help protect the interests of parties to a contract such as sellers and purchasers of real estate. For that reason both buyers and sellers of real estate should be familiar with how to draft, negotiate and enforce their contract to protect their interests.