What does a contract need to include in order to establish a legal relationship?

In order to establish a legal relationship, a contract must include an intention to create a legal relationship. This means that both parties entering into the contract must demonstrate their willingness to be bound by its terms and conditions, indicating that they understand the contract has legal consequences. Without this intention, even if all other components of a contract are present, it may not hold up in a court of law because there was no mutual agreement to treat the arrangement as legally binding.

Other elements such as standardized terms or negotiated terms are important for clarity and understanding between the parties involved, but they do not inherently establish the legal relationship. A verbal agreement can be legally binding, provided the intention to create that legal relationship is evident, but it is not a requirement on its own to ensure that the contract is enforceable. Therefore, having the explicit intention to create a legal relationship forms the foundational basis for any contract to be considered legitimate and enforceable in the legal sense.