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Valid:
A valid contract is one that is enforceable at law.
Void:
A void contract is one that was never enforceable at law.
Voidable:
A Voidable contract is one in which a party has the right to avoid obligations under the contract
without incurring legal liability.
The formation of a valid informal contract, such as a life or health insurance policy, involves four
general requirements:
The parties to the contract must manifest their mutual assent to the terms of the contract.
The parties to the contract must have contractual capacity.
The parties to the contract must exchange legally adequate consideration.
The contract must be for a lawful purpose.
Mutual Assent:
The requirement of mutual assent is met when the parties reach a meeting of the minds about
the terms of their agreement.
For life and health insurance policies, as well as for other contracts, the parties reach this
meeting of the minds through the process of offer and acceptance in which one party makes an
offer to contract and the other party accepts that offer.
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