Which essential contract element means both parties must agree on the contract terms?

The essential contract element that means both parties must agree on the contract terms is mutual assent. This concept refers to the mutual agreement of both parties to enter into a contract and to the specific terms within that contract. It is often represented by the phrase "meeting of the minds," which signifies that all parties involved have a clear understanding of and agreement to the contract's terms and conditions.

Mutual assent is crucial because without this agreement, a contract cannot be formed. Both parties must not only agree to the major terms but also understand them fully. This agreement is typically established through an offer by one party and acceptance by the other, which demonstrates that both individuals have a clear understanding and acceptance of what is being proposed.

In this context, other elements listed, such as capacity, consideration, and lawful purpose, serve essential roles in the formation of a legally binding contract but do not specifically pertain to the agreement of both parties on the contract terms. While capacity refers to the legal ability to enter into a contract, consideration involves the value exchanged between parties, and lawful purpose relates to the legality of the contract's content, it is mutual assent that directly addresses the necessity of agreement between the parties. Thus, mutual assent is foundational for any enforceable contract.