Contract: A contract is defined as an agreement between two or more parties that is enforceable by law. The contract can be written or oral. The essential elements of contracts under English law are: • Offer and acceptance • Consideration • Intention to create a legal relationship • Capacity • Legality of purposeOffer and acceptance: The first step in contract is to make an offer and the person or party who makes the offer is The offeror and the person or party to whom the offer is made are recipients of the offer. A contract occurs when offers are made by one person or party to another person or party. The offer must be clear to the recipient and there is no misunderstanding in the offer. Consideration: Consideration must have “economic” value, but the court will not inquire to see whether the parties received equal value. Parties taken to protect one's interests (Thomas v Thomas 1842). The consideration must be an economic value and not necessarily the same value. Each party to the promise must gain something and lose something by virtue of the promise. Intention to create a legal relationship: There must be a meeting of minds also known as “Ad idem” when one party accepts the offer of another party. Both parties must understand and agree to establish legally binding relationships. It is a legal presumption that the parties must have the intention to create legal relationships in commercial agreements and not in social or domestic agreements. Capacity: Capacity refers to sanity. People who are mentally incapacitated at the time of the contract can void the contract because they did not understand the terms of the contract and the other party can take advantage of their situation. If a contract is made in a situation where a person is incapacitated, then... middle of paper... one party and the other can save their money, this creates huge problems for both parties because many of the things they go badly. For example, terms and conditions, liabilities, contract duration, payment terms are the essential components of a well-drafted contract. Many problems arise when the parties draft the contract and do not review it on their end. A contract that is unclear and does not specifically define each party's obligations opens the door to litigation that will cost more than the cost of paying an attorney to properly draft or review the contract before the parties sign the contract. It is in the best interest of both parties to have a lawyer draft all business contracts or review the contract for both parties or at least provide a template so both parties can use it to draft their own contract.