Many business litigation cases in Indiana arise from a breach of contract, ranging from breach of confidentiality agreement and unfair competition to the breach of a non-compete agreement. Business contracts — and their risks — will always be part of the business world.. However, it is important for business owners to know several critical elements that contracts must contain so that can be considered valid and enforceable.

For starters, you cannot make a contract with an incapacitated person, or a people under the influence or drug or alcohol. Contracts contain provisions and terms that the two parties must agree upon. If one party is not in the right mind or legal age to examine the content of the contract, the document is considered void and unenforceable.

Secondly, there must be a mutual agreement among all parties involved. Usually, a contract involves an offer and an acceptance that mirrors the terms of the offer. If the offer in the contract does not meet the response or expectation of the other party, then there is no mutual agreement. The acceptance of the contract should be clear so that the contract is considered binding.

Another critical element in a contract is consideration. Consideration means that the two parties involved must exchange something of value with one another. This element distinguishes the difference of a contract from a gift. A gift is voluntary transfer of property to another person, while a contract requires something in exchange.

Finally, a business contract is not valid and unenforceable if it requires both parties to break the law. This is why contracts that go against public policy, business and employment law is considered illegal.

Knowing these four critical elements in a contract may provides greater clarity for business owners when making future transactions for their business. An attorney, however, can help businesses ensure compliance with these rules.