Contract law

• Contract


  An agreement between 2 or more persons (physical/natural or legal) that creates an obligation to do, or not to do a particular thing
• To be enforceable, the contract must be a valid, subsisting agreement between the parties
• Parties to a contract are bound by the terms to which they have agreed, as long as they do not result from fraud, duress, or undue influence
• Binding force of a contract

  Based on the mutual agreement and sincerity between the two parties involved
• Types of contracts


  • Express contract
  • Implied contract (implied-in-fact, implied-at-law)
  • Executed contract
  • Executory contract
  • Bilateral contract
  • Unilateral contract
  • Adhesion contract
• Formation of the contract

  1. Agreement between the parties

  2. Offer

  3. Acceptance

  4. Intention to create legal relations

  5. Consideration
• Offer


  A promise, which by its terms is a demonstration of willingness to enter into a bargain
• Elements making an offer valid

  • Presented in a manner that allows the offeree to reasonably perceive that their agreement is sought and will conclude the deal
  • Statement of present intent to enter a contract
  • Definite proposal that is certain in terms
  • Communication of the offer to the prospective offeree
• Characteristics of an offer

  • Valid until its specified expiration or a reasonable time
  • May be revoked by the offeror anytime before it has been accepted
  • Rejected when the offeree's words indicate they do not intend to accept or consider it further
• Acceptance


  An expression of assent to the offer's terms, made by the offeree in a manner requested or authorised by the offeror
• Valid acceptance


  • Offeree knows of the offer
  • Offeree manifests an intention to accept
  • Acceptance is unequivocal and unconditional
  • Acceptance is manifested according to the terms of the offer
• Silence alone can never be acceptance
• Intention to create legal relations


  Both parties must intend the agreement to be legally binding
• Consideration


  The inducement, the reason, the cause, the price or motive that causes a party to enter into an agreement or contract
• Both parties to the contract must provide consideration
• Competent parties


  A natural person who agrees to a transaction must have full legal capacity to become liable for duties under the contract
• Contract concluded by a minor

  Minors can avoid the legal duty to perform the terms of the contract without any liability for breach of contract. The contract is valid but voidable.
• Contract concluded by a person suffering mental incapacity


  A party who does not comprehend the nature and consequences of the contract when it is formed cannot validly consent to a contract. Any contract entered into by such an individual is considered null and has no legal effect.
• Contract concluded by intoxicated persons


  A contract made by an intoxicated person at the time of the conclusion of the contract is voidable. If the person becomes sober and promises to perform or fails to make it void within a reasonable time, they have ratified the voidable contract and become legally bound.
• Legality of the subject matter

  When the subject of a contract is prohibited by law, the subject matter of the contract is illegal and so is the contract
• Reality of consent


  For a contract to be enforceable, the parties must mutually assent to the proposed objectives and terms of it
• Mistake


  A mutual or common mistake of fact regarding the contract's subject matter can invalidate the contract if it significantly changed the subject matter. Unilateral mistakes generally have no effect on validity, except if the error in value is substantial or caused/known by the other party. Mistakes of law do not invalidate a contract.
• Fraud


  The willful misrepresentation or concealment of a key fact of a contract, designed to persuade another to enter into it. Fraud prevents mutual agreement and can make the contract void or voidable.
• Duress


  A wrongful act or threat by one person that compels another to perform some act, such as sign a contract, which they would not have performed voluntarily. This makes the contract void or voidable.
• Undue influence


  The unlawful use of power by one person over another to override their will. This can make a contract unenforceable.