What must be true for a contract to be legally binding?

For a contract to be legally binding, it is essential that both parties involved are mentally competent and consenting to the terms of the agreement. This means that each party has the legal capacity to enter into a contract, which generally includes being of sound mind, understanding the contract's nature and consequences, and being of a legal age to form a contract (typically 18 years or older). Consent must also be freely given without any coercion, misrepresentation, or undue influence, ensuring that both parties agree to the terms voluntarily.

In contrast, other conditions such as the presence of a witness, the requirement of a written format, or the age of the parties involved do not universally apply to all contracts. For instance, many verbal contracts can be legally binding if they meet the criteria of capacity and consent, even if they are not documented in writing or witnessed. Thus, the need for mental competence and mutual consent is the foundational element that maintains the integrity and enforceability of a contract.