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Economics

Understanding the Elements of a Valid Contract

Quick fact

A contract can be enforced even if it's not written, as long as it has an offer, acceptance, consideration, legal capacity, and lawful purpose—the five elements of a valid contract.

Why this is interesting

Have you ever wondered why a handshake can sometimes be binding, but a written promise can't be enforced? The secret lies in a few key ingredients that make a contract legally solid.