What is a business contract?
A business contract is an agreement between two or more parties that is enforceable by law. It is essentially a promise whereby one party agrees to do something in exchange for a benefit.
What are the elements that make a business contract valid and enforceable?
In order for a business contract to be valid, there must be the following elements: offer and acceptance, consideration, capacity, consent, and lawful purpose.
Does the exchange of consideration in a business contract have to have a specific value?
The actual value or amount exchanged between the two parties does not matter under law. It has been long held that consideration can be as small as a ‘peppercorn’ – in other words, a small grain of spice is enough to constitute valuable consideration.
Is a minor allowed to enter into a business contract?
In every valid business contract, both parties must have the ability or capacity to understand the terms and nature of the contract. Therefore, anyone who is not the age of majority in Canada (18 or 19 years) does not have the capacity to enter into a valid and enforceable contract. By the same token, anyone with a developmental disability or has impaired judgement cannot legally enter into a contract.
If I am forced into a business contract through threats, is it enforceable and legal?
No. In order for a business contract to be legal and enforceable, the two parties must provide genuine consent. This means that there can be no pressure, duress, or undue influence brought to bear on either party to a contract.
