Requirements for a Valid Contract [MUSIC PLAYING] [This video shows the narrator’s words typed out in time to the narrator’s speech and accompanying clip art that does not add any additional information to the video] Narrator: Requirements for a valid contract. [Clip art of a court gavel and a contract] Narrator: A court will award a remedy for breach of contract only if the contract is valid. A valid contract requires four things-- an offer and acceptance, consideration, competent parties, a legal purpose. Offer and acceptance. [Clip art of two people negotiating about money] Narrator: An offer is one party's expression of willingness to enter into a bargain that is communicated to the other party. An offer must show a genuine intent to contract. Negotiations or increase about the possible terms of a contract are not offers. An offer must be sufficiently definite so that if it is accepted a court will be able to figure out what the parties agreed to. Acceptance is the other party's manifestation of agreement to the terms of the offer made in a manner invited or required by the offer. [Clip art of a thumbs up] Narrator: Usually, an offer is accepted when the other party makes an oral or written promise to abide by its terms. [Clip art of a speech bubble and a pen] Narrator: But sometimes the other party accepts by taking the action requested by the offer instead of promising to do so. An offer and acceptance form a valid contract when they show the parties mutual consent to the contract essential terms and conditions. [Clip art of two checkboxes: I agree and I disagree. I Agree is marked with a green checkmark] Narrator: Consideration. Consideration is a bargain for exchange, with each party giving something of value up to receive something else of value in return. [Clip art of two hands exchanging money] Narrator: Each party must provide consideration for a valid contract. For example, if Party A agrees to purchase software from Party B, Party A's consideration is payment for the software or promise to pay for the software. And Party B's consideration is the software or promise to deliver the software. [Clip art of a stack of coins for Party A and a CD-ROM for Party B. The coins exchange places with the CD-ROM, representing the exchange the Party A and Party B made] Narrator: Competent parties. A valid contract requires that both of the contracting parties be competent to enter into the agreement. [Clip art of two people and clip art of a handshake] Narrator: A competent party is someone who is not a minor, mentally ill, under a guardianship, or intoxicated. Legal purpose. [Clip art of the scales of justice] Narrator: Contracts that violate the law or some public policy might be void and unenforceable. Requirements for a valid contract.