As an entrepreneur and business owner, contracts likely form a large part of your life. You undoubtedly already know that you should always put your contracts into written form to make them easier to enforce in the event of a future disagreement between you and the other party. But did you know that each of your contracts should contain four essential elements?

MoneyMatters.com explains that every contract should contain the following:

  1. Offer
  2. Acceptance
  3. Consideration
  4. Lawful agreement
    1. Offer

Your contract’s offer sets forth the goods or services your business will provide to the other contract party. Alternatively, in the case of a contract between you and one of your vendors, your offer becomes your de facto consideration for the equipment, supplies, etc. the vendor provides to you.

  1. Acceptance

Your contract’s acceptance comes in the form of the other party’s signature at the bottom of the contract, thereby evidencing his or her agreement to accept your offer.

  1. Consideration

Your contract’s consideration sets forth the amount of money the receiving party will pay for the offering party’s goods or services. Sometimes consideration consists of the receiving party’s promise to perform certain acts in exchange for the offering party’s goods or services.

  1. Lawful agreement

All contracts must constitute lawful agreements. In other words, you cannot make a contract that calls for one party to provide illegal goods or services to the other.

Needless to say, both parties must have the legal capacity to contract. For instance, both of you must have attained the age of at least 21. In addition, neither of you can suffer from a mental deficiency that makes it impossible for you to understand the nature of the contract and what it requires each of you to deliver to the other.