Question

In the presence of three witnesses, your neighbor offers to pay you $100. You accept. The agreement is written and signed by you, the neighbor and the three witnesses. Later your neighbor later decides not to pay you the $100. Is the agreement enforceable? Make sure you answer the question "Yes" "or" No as to whether it is enforceable. Then provide your analysis by outlining each of the elements of a valid contract and indicating whether each element has been satisfied.

Answer 1

No the agreement is not enforceable.

The agreement or the contract agreement must have all of the following elements included for it to be enforceable legally.

Offer – One the parties promises to do or not do a particular act in the specified time in the future. Here, the offer is payment of $100.

Acceptance – both the parties must accept the contract unambiguously. Both the parties (you and the neighbor) have accepted the offer.

Consideration – something of value must be promised by each of the parties to enter into a contract. It could be of monetary or non-monetary value. There is no consideration from your side in exchange of the $100 offered by the neighbor.

Mutuality of Obligation – both the parties must understand and agree to the basic substance and terms of the contract. Both you and the neighbor have agreed to the obligation. The neighbor has agreed to pay and you have agreed to accept the payment.

Competency and Capacity – the person or party who is entering the agreement must have the legal rights to enter into the contract and abide by the terms of the contract. Both the parties must also be of able mind or have capacity to clearly understand the terms of the contract. The neighbor has the capacity to pay $100 (though not mentioned explicitly in the case presented) and you have the capacity to accept the payment, since no other contradictory information is presented.

Written Requirement – the contract may be written or oral or in other form. Having a written documentation or witness is not always necessary. The contract is documented in writing and signed by the witnesses.

As clear from the situation mentioned here that the neighbor agreed to pay to a sum of $100. However, there is no consideration or offer in exchange for the offer. Since one of the elements of the contract are not present in the contract agreement, it is not a valid contract and is not enforceable.