Free tool · Contract Law
Is It a Binding Contract?
An agreement is a legally binding contract when it has a real offer, an acceptance that matches it, consideration (something of value exchanged), parties who have the capacity to contract, a lawful purpose, and, for some kinds of deal, a signed writing. A verbal agreement can be binding, but not always: land sales, deals that cannot be performed within a year, and sales of goods above a set amount must usually be in writing. Answer the questions below to see which element is missing or in doubt.
Tool · Contract Formation Checker
A contract may have been formed, but it is probably unenforceable without a signed writing.
A real offer: Satisfied. A reasonable person in the other party’s position would take it as a commitment that they could accept (the objective test).
Definite terms: Satisfied. Quantity and the other main terms are stated.
Offer communicated: Satisfied. The other party knew of the offer.
Offer still open: Satisfied. The offer had not been revoked, rejected or lapsed when it was accepted.
Acceptance: Satisfied. An unconditional assent to the terms of the offer, communicated to the offeror.
Consideration: Satisfied. Each side gave, or promised, something of legal value in exchange for the other’s promise. Courts do not weigh how fair the exchange was.
Capacity: Satisfied. Both parties had legal capacity.
Lawful purpose: Satisfied. Nothing about the purpose or performance is illegal or against public policy.
Writing, if required: Problem. This is a sale of goods for $500 or more (the amount in most states; a few states have raised it), and there is no signed writing and no exception. The contract is unenforceable under the statute of frauds. It is not void: the parties can perform, and a party may recover in restitution for benefits conferred.
What to look at next
- Look again at: writing, if required. Is there a fact that cures it, or a substitute such as promissory estoppel or restitution?
General American common-law and UCC principles, simplified. States differ, other countries differ, and real cases turn on facts that this form cannot capture. Not legal advice.
Walks through the elements the common law (and, for goods, UCC Article 2) asks for before it treats an agreement as a binding contract: a real offer, an acceptance, consideration, capacity, lawful purpose and, in some cases, a signed writing. It shows which element is in doubt. It is not a prediction of how a court would rule: the rules are simplified general American principles, states and countries differ, and real cases turn on facts that a form cannot capture. Not legal advice. Runs in your browser; nothing is stored or sent.
How to use it
- Choose what the contract is about, because contracts for goods follow the Uniform Commercial Code, which is more forgiving about open terms and changed replies.
- Say how the first statement was made, and how the other side replied.
- Say what each side gave, whether anyone lacked capacity, and whether the law requires a signed writing.
- Read the result element by element, and the points to look at next.
Common questions
Is a verbal agreement legally binding?
Often yes. An oral contract can be binding if it has the usual elements. But some contracts must be in writing to be enforceable (the statute of frauds), including most sales of land and sales of goods for $500 or more in most states, and an oral contract is much harder to prove.
Does a contract need to be signed to be binding?
Only some do. Most contracts can be formed by words or conduct. A signature matters mainly where a statute requires a signed writing, and as strong evidence of what was agreed.
What if one side was a minor, or was drunk?
A contract with a minor is usually voidable at the minor’s option, and a contract made by a person who could not understand the deal may be avoided if the other side knew or should have known. The tool flags these.
Learn the law behind the tool
This tool is part of our Contract Law course, with lectures, concept maps, flashcards, interactive exercises and a capstone case. Contract Law, Module 1: Contract Formation.
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General information, simplified, mainly on American law, not legal advice. States and countries differ, and real cases turn on facts that a tool cannot capture.