A contract is a legally binding agreement between two or more parties that have come to a consensus to fulfill certain terms and conditions as it may be outlined in their agreement. The first step towards coming into the agreement is therefore agreeing to the terms stipulated in the contract with both parties offering opinions on what needs to be changed or what needs to be emphasized before the contract is deemed fully operational. Such a contract should have the following elements
Intention to create a legal relationship- A contract is a result of an agreement between two parties. so for it to be enforceable, there must have been an aim to create an officially permitted association. The courts will determine whether the parties intended to create legal relations. The case of Balfour v Balfour, 1919 will help bring out consent. In the case, the defendant was a civil servant in Ceylon. While he and his wife were on leave in England, it became apparent that because of ill-health, then the wife would not be able to return to Ceylon. The husband promised to pay her thirty pounds a month whilst forced to live apart. He failed to pay, and his wife sued on the contract. Held that the husband was not liable because there was no necessary implication from the circumstances of the parties that they intended to make a legally binding contract. It was more like a domestic arrangement between husband and wife rather than a contract.
Offer and acceptance –An offer is a proposal in which a person shows his intent to make a deal or sell something. This offer entails the terms and conditions under which the offeror would be willing to go through with the deal. This offer needs to be expressed unambiguously; for an offer to be valid, the offer must be communicated to the interested party. The offeror holds the right to withdraw his offer any time before the other side has communicated his acceptance. An offer is also considered open and valid until the other part has rejected or accepted it. Once the offer is rejected, the offeror has every right to amend his previously outlined terms and conditions, and he could not be questioned for it.
Acceptance is the willingness of the other party (acceptor) to enter into a legally binding and enforceable contract with the offeror at the already stated terms and conditions (Jeffery & Susan, 2009). In order for acceptance to be valid in terms of law, it needs to be communicated explicitly to the offeror with any other conditions attached to it. Attaching conditions would make it a counter-offer and then it depends upon the initial offeror whether to accept it or not. It must be understood, that simply portraying gestures of acceptance would not make it legal. The acceptance must be communicated before the indicated time in the offer has lapsed (Jeffery & Susan, 2009).
Consideration- A simple contract is not legally binding unless it is supported by consideration. Consideration is a critical concept in terms of contract law. Consideration is based on the concepts of legal benefit and detriment. This consideration needs to be valuable and sufficient in the eyes of law in order for a contract to be valid and enforceable. Though consideration is required in every simple contract, it needs not to be adequate as long as it has some economic value. Even an act or omission of small value can be a consideration, but a mere sentimental motive for making the promise will not make it binding. Past consideration is also invalid; in order for the consideration to be valid, a new promise needs to be made at the time of the contract. It should be well understood that in absence of consideration, an agreement could not be termed as a contract and subsequently, it could not be enforced or challenged upon in a court of law (Jeffery & Susan, 2009).
Genuine consent- Parties to the contract must genuinely consent to the terms of the contract. The concert of a party should not be obtained in an unfair manner such as misrepresentation coercion or by mistake. The negotiations of a contract should be between two persons who are genuinely intending to form a contract if one party is not willing or his consent has been obtained using undue influence, duress the contract becomes unenforceable (McKendrick, 2005).
References
Jeffery, F. B., & Susan, S. S. (2009). Introduction to Business Law. Cengage Learning.
McKendrick, E. (2005). Contract Law – Text, Cases and Materials. Oxford: Oxford University Press