When Is A Contract Legally Binding?

What is a contract?

The definition of a contract is a legally binding, and enforceable by law, agreement made between two or more parties. In cases of dispute when the parties are arguing whether a contract, or fundamentals of it, have been broken, it may be required to take the case before the courts. This allows the judgement to be made about whether there has been a “breach of contract”. The judges will have to look at certain criteria before deciding whether or not a contract has been breached and is enforceable.

The 4 crucial elements of a Contract:



In the contract there must be a definitive and clearly stated offer to do something. E.g. a quote to offer a lease. There will be a time frame usually written into the contract. It has to be precise, an offer does not include estimates, proposal requests, expressions of interest, or letters of intent.
An offer will lapse: – when the time for acceptance of the offer expires or if the offer is withdrawn before it is accepted; or after a reasonable time in the circumstances (usually the greater the value of the contract, the longer the life of the proposal).


Only what is offered in the contract can be accepted. The terms and conditions of the proposal must be accepted exactly as they are proposed in the contract. If prior to an agreement any new terms are suggested, this is regarded as a counter offer which can be accepted or rejected. This may occur a few times before an agreement is reached and accepted. It is irrelevant who makes the actual final offer; it is the acceptance of the proposal that brings all the negotiations to an end by establishing the terms and conditions of the contract.
Acceptance may be given in writing, verbally or inferred by action which clearly indicates acceptance (performance of the contract). Whatever the circumstances the agreement must conform to the method accepted by the offerer for it to be effective and legal.

Intention of legal consequences:

A contract necessitates that the parties involved are intending to enter into a legally binding agreement. All parties must acknowledge that they are obliged by law to adhere to the contract and that the agreement can be enforced by law. The intention to create legal relations is recognised by all, so the contract doesn’t have to state that you understand and intend legal results to follow as this is presumed upon entering the contract. If all the parties to a contract agree and determine that the contract is not to be legally bound, this must be clearly stated in the contract for it not to be legally enforceable.


In order for a contract to be binding it must be reinforced by valuable consideration. That means one party promises to do something in return for a promise from the other party to provide a benefit of value (the consideration). The consideration is basically a trust agreement between the parties as the agreed price for the other’s promises. This is usually accepted in monetary values, but isn’t always; it can be anything of value including the promise not to do something, or to refrain from exercising some right.

The Terms and Conditions:

If, for any reason, there is a dispute over a contract, it is brought to the courts to be dealt with legally then the courts will have to look in detail at the terms and conditions that surrounded the contract. A contract cannot be said to be complete if the terms and conditions were unclear. However, it needs to be recognised that every court case is unique, and a judge may have to try to clarify the exact terms and conditions linked to the disputed contract, rather than a simple decision on whether the contract has been broken or not.

“Breach of Contract”:

A breach of contract occurs when one of the parties in the agreement fails to fulfil one or more of the specified terms and conditions. A violation can also be determined if some agreed work carried out is malfunctioning or sub-standard; or if one party has not carried out the agreed work. This is then placed in the hands of the law where a judge will determine if the contract has been breached and damages may be awarded to one of the parties.

The law relating to contracts can be comprehensive and complex, serious consideration should be given before taking any legal action. Harold stock & Co have specialised qualified solicitors who are confidently able to advise and guide you. We assure you that all work is confidential and we will advise you without any misconception of an outcome.

Contact us on info@haroldstock.com  or 01457 835597.

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