A contract is a legal transaction in which two or more parties have declarations of will that will have a certain legal result against each other, and in which there are mutual rights and obligations. The elements of the contract are the elements that are essential for the formation of a valid contract and are as follows:
- Parties: The most basic condition for the formation of a contract is the existence of parties. The parties are determined as the parties to the contract and accept their rights and obligations.
- Subject matter: The subject matter of the contract is determined on the basis of the parties’ mutual declarations of will and constitutes the purpose of the contract. The subject matter is usually expressed as money or goods.
- Reciprocity: The parties to the contract must accept their rights and obligations towards each other. Therefore, reciprocity is required for the contract to be valid.
- Declaration of will: The parties must make mutual declarations of will regarding the subject matter of the contract. The declarations of will must have a certain format for the contract to be valid.
- Legal effect: The formation of the contract is realised when the mutual declarations of will of the parties give rise to legal consequences. The legal result is determined depending on the subject matter of the contract and the rights and obligations accepted by the parties.
These elements of the contract are necessary for a contract to be considered valid. In addition, the capacity of the contracting parties is an important factor for the contract to be valid. The capacity of the parties means that the parties to the contract have sufficient knowledge, will and freedom to enter into the contract. The elements of the contract and the capacity of the parties are factors that affect the validity of a contract and play an important role in the formation of the contract.