Valid contract

Key Takeaways

• A valid contract holds five elements: an offer, an acceptance, consideration, parties with legal capacity, and a lawful purpose.
• Validity and enforceability are separate questions, because an agreement can hold all five elements and still fail in court when a required signed writing is missing.
• In Washington, an agreement to convey real estate is put in a signed writing, because RCW 64.04.010 requires conveyances to be by deed and RCW 64.04.020 requires a deed to be written and signed.
• In Washington, a promise to pay a broker a commission is void unless it is in writing and signed by the party to be charged (RCW 19.36.010(5)).

What It Means

A valid contract is an agreement the law will enforce, because it contains every element the law requires. Courts look for five of them: an offer, an acceptance of that offer, Consideration (something of value each side gives up), parties with the legal capacity to contract, and a lawful purpose. Miss one and the agreement drops into a weaker category. An agreement made for an illegal purpose is a Void Contract, meaning no contract ever formed and neither side can sue on it. An agreement signed by a party who lacked capacity is voidable, meaning the protected party may cancel it or choose to go ahead. An agreement that holds every element but cannot be proved the way the law demands is unenforceable.

Valid and enforceable are related, but they are not the same test. A contract can carry all five elements and still lose in court when a writing requirement applies and no signed writing exists. That gap is why real estate runs on written, signed forms instead of conversations, and why a broker who relies on an oral promise is putting the client at risk.

How It Works in Washington

Washington applies the general contract elements and then adds a writing requirement for land. RCW 64.04.010 provides that every conveyance of real estate, or any interest in it, and every contract creating or evidencing an encumbrance on real estate, shall be by deed. RCW 64.04.020 provides that every deed shall be in writing, signed by the party bound by it, and acknowledged before a person authorized to take acknowledgments. Those two sections are Washington's Statute Of Frauds for real property, and they are the reason offers, counteroffers, and acceptances travel on signed forms rather than by phone.

RCW 19.36.010 lists further agreements that are void unless they are in writing and signed by the party to be charged. Subsection (1) reaches any agreement that by its terms is not to be performed within one year of the making. Subsection (5) is the one Washington brokers meet on every listing: an agreement authorizing or employing an agent or broker to sell or purchase real estate for compensation or a commission. An oral commission promise is not an enforceable contract in Washington, however sincerely it was made.

Example

Marisol lists her Spokane house at $475,000. Devon signs a written offer of $462,000 with $15,000 in earnest money and a 30-day closing, and Marisol signs it back without changing a word. Every element is present. Devon made the offer, Marisol accepted it, the $462,000 price and the earnest money supply consideration on the buyer's side while the promise to deliver title supplies it on the seller's side, both parties are adults of sound mind, and buying a house is a lawful purpose. Because the Purchase And Sale Agreement is written and signed by both of them, it also clears Washington's writing requirement, so it is valid and enforceable.

Change one fact and the outcome changes. Had Marisol agreed to the $462,000 by phone and signed nothing, the five elements would still be there, but Devon would hold no signed writing to enforce, and Marisol could sign with a different buyer the next morning.

Common Mistakes and Exam Traps

• Consideration does not have to be money and does not have to be equal in value, so a promise exchanged for a promise satisfies the element.
• A contract signed by a minor is voidable by the minor rather than void, so the minor may enforce it or walk away from it.
• Void and voidable are not synonyms: void means no contract ever formed, while voidable means one party has the power to cancel a contract that did form.
• An oral agreement to sell land can contain all five elements and still fail, because Washington requires a signed writing for real property agreements.