This topic will cover the basic concepts of contracts, including what constitutes a valid contract, essential elements of a contract, types of contracts, and the importance of contracts in business transactions.
Introduction to Contracts – Study Notes
| Element | Description |
|---|---|
| Definition | A legally enforceable agreement between two or more parties that creates mutual obligations. |
| Purpose | Sets out each party’s rights and duties, provides certainty, and offers a remedy if the agreement is breached. |
| Scope | Can be written, oral, or implied by conduct, but some types must be in writing (e.g., real‑estate sales). |
| Element | Key Requirement | Typical Question |
|---|---|---|
| Offer | One party proposes definite terms. | “What exactly is being offered?” |
| Acceptance | Unconditional agreement to the offer’s terms. | “Did the offeree accept in the prescribed manner?” |
| Consideration | Something of value exchanged (money, services, a promise). | “What is each side giving up?” |
| Intention to Create Legal Relations | Parties must intend the agreement to be legally binding. (Presumed in commercial contracts; not in social/family arrangements.) | “Is this a business deal or a casual arrangement?” |
| Capacity | Parties must have legal ability to contract (e.g., age, mental competence). | “Is the party a minor or otherwise incapacitated?” |
| Legality | Subject matter must be lawful. | “Does the contract involve illegal activity?” |
| Certainty | Terms must be clear enough for enforcement. | “Are the price, quantity, and performance dates defined?” |
All elements must be present for a contract to be enforceable.
| Category | Description | Example |
|---|---|---|
| Bilateral | Mutual promises (both sides promise to do something). | Sale of goods: buyer promises to pay, seller promises to deliver. |
| Unilateral | One promise in exchange for an act. | Reward for finding a lost dog. |
| Express | Terms are stated explicitly (written or spoken). | Lease agreement. |
| Implied | Terms inferred from conduct or circumstances. | Paying for a meal at a restaurant. |
| Executed | All obligations have been performed. | Completed construction project. |
| Executory | One or more obligations remain outstanding. | Ongoing service contract. |
| Void | No legal effect from the start (illegal purpose). | Contract to sell narcotics. |
| Voidable | Valid until one party rescinds (e.g., due to misrepresentation). | Contract signed under duress. |
| Unenforceable | Valid but cannot be enforced (e.g., statute of limitations). | Oral contract for the sale of land (where writing is required). |
Pre‑contractual Negotiations
Offer
Acceptance
Consideration & Mutual Assent
Writing Requirement (Statute of Frauds)