Binding contracts must contain offer, acceptance, consideration
Q: What makes a promise legally enforceable?
A: To form a binding contract, a promise must contain three elements — offer, acceptance and consideration. More than one party must be involved. Someone must make an offer and someone else must accept it. If I make a private promise to myself, nobody else has standing to enforce it. But when I declare my promise publicly, I must exercise caution.
Q: Can you provide an example?
A: If I say to my spouse, “I resolve to jog every day this year,” she will see the futility and dismiss it. There is no offer and no acceptance. But if I say to her, “I will exercise daily if you will give up carbonated beverages,” and she takes the bait, I may have a problem. I made an offer. She accepted. If there is consideration for the deal, it becomes a binding contract that at least one of us is doomed to violate.
Q: What is consideration?
A: Each party must agree to either do something or refrain from doing something as payment. Normally, my wife is free to drink every diet beverage she can stand, and I am free to vegetate at will. So, if she agrees to give up the juice, and I agree to exercise, we have each provided consideration and we have a contract that either of us could, theoretically, enforce in court.
To summarize, an offer made and accepted becomes legally binding when consideration is exchanged. Promise with care.
PAULA BURKES, BUSINESS WRITER