What is a Contract?
Contract is an official agreement. It could be written or even be in oral where it can be written by using formal or informal terms, or entirely verbal or spoken. Making a contract is not as easy as it seems. There are a few key elements which needs to be taken into account
Six Important Elements of a Contract
- Offer
- Acceptance
- Consideration
- Intention to create legal relation
- Certainty
- Capacity
- Offer
An offer could be a promise or an agreement that needs to be in contract because if there is no offer than there will be no contract. To make an offer, there should be at least two parties or even more so that it would be legally capable of entering into a contract. If the offer is accepted than it would constitutes to a legally valid contract. When an offer is being made, the other party or person would know what is being offer and what the person or party who made the offer expect to have in return.
- Acceptance
Acceptance is an express act or implication by conduct that manifests assent to the terms of an offer in a manner invited or required by the offer so that a binding contract is formed.
In the law of contracts, acceptance is one person’s compliance with the terms of an offer made by another.
There are three types of acceptance:
- conditional acceptance
- express acceptance
- implied acceptance
- Consideration
Consideration is also a very important element in the contract. Consideration in a contract is when the other person would be giving back something in return. It would be considered as an exchange which would be made between the promisee and promisor. There should be consideration in a contract so that it would be legally valid.
- Intentions to Create Legal Relations
This is an intention to enter a legally binding agreement or contract. Intention to create legal relations is a motion of every contracting party must have the necessary intention to enter into a legally binding contract although the Contracts Act 1950 is silent on the intention to create legal relations as one of the requirements of a valid contract
There are a few concepts of intention to create legal relations. Intention to create legal relations also means an intention to be serious about agreement significance. This will ensure that the contracting parties mind will be obvious to enter a serious contract.
Without intention to create legal relations, the parties cannot;
- sue each other
- the contract may become a mere promise
- the contract may lack the binding effect
- Certainty
The terms and regulations being made in a contract should be stated clearly and understood by the parties of the contract. If the agreement is not certain, it would be no longer valid.
- Capacity
Capacity in a contract means that a person is legally able to enter into a contract. 18 years old is stated as the age of a major. Minors who are people below the age of eighteen have no capacity to enter into contracts. Therefore, insane people or people with unsound minds also cannot enter into any valid contracts.
Hence, it is important to have all the main elements in a contract. The contract is legally valid only if all the elements above are present. People should take precaution in making a contract to make sure that the parties would be in agreement with the terms made in a contract.
