A contract assures the parties concerned that their agreement is respected and that they have the right to claim damages if the other party is unable to comply with the agreement. It provides security in trade relations and encourages the parties to respect their commitments. It is therefore essential to ensure that contracts are properly drafted so that they can be brought to justice. (1) According to the benefit-disadvantage theory, there is no reasonable consideration unless a promise is made in favour of the promisor or to the detriment of the promise, which reasonably and fairly induces the promisor to make a promise for something else for the promise. For example, promises that are pure gifts are not considered enforceable, because the personal satisfaction that the donor of the promise can receive through the act of generosity is not normally considered a sufficient disadvantage to justify fair consideration. 2) According to the Bargain-for Exchange theory of reflection, there is an appropriate consideration when a promiser makes a promise in return for something else. Here is the essential condition that the promisor was given something special to induce the promise made. In other words, bargain for exchange theory differs from profit of detriment theory in that bargain for exchange theory appears to be the motive for the parties` subjective commitments and mutual agreement, while in detriment-benefit theory, the emphasis seems to be on objective legal disadvantage or benefit to the parties. A legally enforceable contract is necessary to protect the interests of the contracting parties and prevent misunderstandings and disputes.3 min read The person making the offer must intend to be legally bound (Harvey v Facey (1893)) and therefore acceptance is valid: contracts are legally enforceable if they comply with state law. By definition, contracts are enforceable agreements entered into by individuals, so each party is confident that their interests are legally protected.
To protect the interests of each party, the agreement must be a favourable contract, as defined by state law. If the promise of the contract is not kept, the injured party may bring an action. Some types of contracts must be in writing. For example, real estate purchase contracts must be written to be enforceable. Another condition of a legally binding treaty is a legally binding intent. This refers to the intention of each party, the terms of the contract being in accordance with the laws of the State in which the contract is concluded. Failure to indicate a jurisdiction results in the inefficiency or legally binding nature of the contract. The intention to create legal relationships is essential to establish the existence of a treaty, as it distinguishes between contracts concluded for purposes of a legally binding nature and contracts that are essentially agreements such as social conventions or decisions relating to family transactions.
. . .