A contract refers to an arrangement or an agreement between two or more individuals or parties that is legally binding on the parties; for a legally binding contract, it must be enforceable by the law. It is worth noting that not all agreements are contracts, however, all contracts are agreements. There are different types of contracts including written contracts, contracts evidenced in writing, contracts under seal, and simple contracts. Written contracts are those contracts that under the provision of law must be in writing – embodied in a formal document, for instance, contract of sale of land. Contracts evidenced in writing are contracts that must be supported by a memorandum or some notes, for instance, contract of guarantee. Contacts under a seal refer to contracts that must be in writing but are only conclusive and enforceable when they are signed, sealed, and delivered. Lastly simple contracts are agreements or contracts whose formation is independent of any legal provisions, for instance, contract of sale of goods.
For a contract to be fully enforceable and legally binding, it must meet or consist of the following elements (“6 Elements of a Valid Contract flashcards | Quizlet”, 2016):
- Offer. An offer refers to the manifestation of intent by one party to contract with another. The party with the expression of intention is known as the offeror while the party to whom the manifestation is made is referred to as the offeree.
- Acceptance. Acceptance refers to the consent by the offeree, which is an external manifestation. Acceptance gives rise to an agreement between the parties, and it may be written, oral, or implied form the way the offeree conduct him/herself.
- Intention. For the agreement to stand as a contract there must be intent by the parties to create legal relations. An agreement is not enforceable unless the parties to the agreement intended such a consequence.
- Capacity. This element refers to the legal ability of a party to take part in a contractual relationship. Every individual can enter into a contractual relationship. However, the law puts restrictions or limits the contracting capacity of specific classes of people including minors, drunken persons, corporations, persons of unsound mind and un-discharged bankrupts.
- Consideration. Consideration refers to the element of bargain in a contract. It is a promise by one party, which is accepted by the other party as compensation for promises made in an agreement.
- Legality. Legality refers to a contract being able to be legally enforceable. It stands for a contract that is entered into for lawful purposes, and it is therefore not injurious to the public.
An example of a disputed contractual agreement.
In Jones v Padavatton, the plaintiff persuaded the defendant, her daughter to leave her well-paying employment to study Law in Britain. The plaintiff promised the daughter a maintenance allowance to last her studying duration. She agreed reluctantly. The plaintiff purchased a house as part of maintenance where the defendant lived. Before the daughter completed her studies, the two had a conflict, and the plaintiff decided to evict the defendant from the house. The defendant argued that there was an existence a contract between them (“Jones v Padavatton”, 2016).
It was held that the parties never had intentions to create legal relations; there was no existing contract but a domestic agreement and as such the mother was entitled to evict the defendant.
I neither agree with the outcome of the case nor the court’s decision. It is true that the defendant had no intention to resign from her job to study. However, it is also true to say that, a contract can be enforced simply through implied acceptance. The defendant accepted the offer of the plaintiff to go and study by leaving her job (implied acceptance). For this reason, therefore, the contract should have stood.
I would like to start a commercial transport business that would run 24 hours a day. My greatest contractual concern in this business would be the acquisition of business licenses, which would enable me to carry on long distance commercial transport during the night.
6 Elements of a Valid Contract flashcards | Quizlet. (2016). Quizlet.com.
Jones v Padavatton. (2016). E-lawresources.co.uk.