Elements of a Contract

10 Key excerpts on "Elements of a Contract"

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  eBook - ePub

  Beginning Contract Law

  • Nicola Monaghan, Chris Monaghan(Authors)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  Chapter 3 Elements of a Contract II

  Learning Outcomes

  After reading this chapter, you should be able to:

  • Understand what is meant by consideration
  • Explain why past consideration is not good consideration
  • Distinguish between promises to pay more and promises to accept less
  • Consider the importance of promissory estoppel
  • Understand the requirements of intention to create legal relations and capacity

  Introduction

  This chapter will explore the remaining three elements that are needed in order to have a valid contract. These are consideration, the intention to create legal relations and capacity. As with agreement, these elements are essential – without them, there would be no contract. Any rights and obligations that a party has would be unenforceable.

  English law requires that the party enforcing a promise has provided consideration; we will look at what is meant by consideration. By contrast, in Scotland there is no requirement that consideration has been provided. The requirements of consideration have proved problematic, especially where there has been a promise to pay more or accept less. Traditionally, the party seeking to enforce the promise was unsuccessful. To find solutions to these problems we will look at the development of practical benefit and the doctrine of promissory estoppel.

  The law also requires the contracting parties to intend to enter into a legal relationship; without such intention, the agreement is not enforceable. Finally, we will look at the requirement that the parties have the capacity to contract.

  Defining Consideration

  Where a person (the promisor) promises to do something for another party (the promisee), the promisee must provide something of value in the eyes of the law (known as ‘consideration’) in return for that promise, otherwise the promise cannot be enforced.

  For example, if Roger promises (i.e. agrees) to sell a copy of Beginning Contract Law

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  Law

  Made Simple

  • D. L. A. Barker, C. F. Padfield(Authors)
  • 2014(Publication Date)
  • Made Simple

    (Publisher)

  7 THE LAW OF CONTRACT In his book Principles of the Law of Contracts, Sir William Anson defined a contract as a legally binding agreement made between two or more parties, by which rights are acquired by one or more to acts or forebearances on the part of the other or others. Shortly it may be defined as an agreement between two or more parties which is intended to have legal consequences. The agreement referred to in the definition means a meeting of minds, called in law consensus ad idem, signifying that the parties are agreed together about the same thing. The definition also emphasizes that the parties to the contract must intend that their agreement shall be legally enforceable. Unless the law regognizes this and enforces the agreements of parties, it would be impossible to carry on commercial or business life. For this reason the law of contract plays a leading role in courses on business studies. These contractual agreements give rise to rights and obligations which the law recognizes and enforces. But certain agreements, such as domestic and social arrangements, are not intended by the parties to be legally binding. The law allows for this. Thus, if Cumming and Gowing agree to meet for dinner and Gowing fails to turn up, the law will do nothing in the matter. The agreement was not intended to create legal rights and duties, and, as such, it is not a contract in law. Every contract is an agreement, but not every agreement is a contract. The object of the law of contract is to identify those agreements which it will enforce and those which it will not. This is of prime importance and will be referred to later in more detail. 1. Essentials of a Valid Contract An agreement will be enforced when the following essential elements exist: (a) Offer and Acceptance. There must be an offer by one party and an acceptance of it by the other. (b) Intention to create legal relations. (c) Capacity of the parties. Each party must have the legal capacity to make the contract.

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  Law Made Simple

  • David L.A. Barker, David L. A. Barker(Authors)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  These contractual agreements give rise to rights and obligations that the law recognizes and enforces. But certain agreements, such as domestic and social arrangements, are not intended by the parties to be legally binding. The law allows for this. Suppose, if Cumming and Gowing agree to meet for dinner and Gowing fails to turn up, the law will do nothing in the matter. The agreement was not intended to create legal rights and duties, and, as such, it is not a contract in law. Every contract is an agreement, but not every agreement is a contract.

  The object of the law of contract is to identify those agreements that it will enforce and those that it will not. This is of prime importance and will be referred to later in more detail.

  7.1 Essentials of a valid contract

  An agreement will be enforced when the following essential elements exist:

  1. Offer and acceptance . There must be an offer by one party and an acceptance of it by the other.
  2. Intention to create legal relations.
  3. Capacity of the parties. Each party must have the legal capacity to make the contract.
  4. Consent must be genuine. The consent must not be obtained by fraud, or duress (such as death threats if the contract is not entered into).
  5. Consideration must be present (except in contracts under seal, i.e. by deed). See p. 126 for a definition of consideration.
  6. Legality of object. The object of the contract must not be one of which the law disapproves.
  7. Possibility of performance.

  All the above elements must be present. If one or more is absent the contract will be either (i) void, (ii) voidable or (iii) unenforceable.

  Void contracts are destitute of legal effect; that is, they are not contracts, and agreements of this kind do not confer legal rights on the parties thereto. For example, a contract by an infant to buy goods other than ‘necessaries’. Similarly, if A agrees with B to break into C ’s house and steal if B pays A £10, the contract is void for it is illegal. Neither party can recover from the other on a void contract, but goods delivered may be recovered by an action in tort because no property (ownership) passes. Money paid under the agreement may be recovered in quasi-contract (see p. 192 ).

  Voidable contracts

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  eBook - ePub

  Law Made Simple

  • David Barker(Author)
  • 2014(Publication Date)
  • Routledge

    (Publisher)

  These contractual agreements give rise to rights and obligations that the law recognizes and enforces. But certain agreements, such as domestic and social arrangements, are not intended by the parties to be legally binding. The law allows for this. Suppose, if Cumming and Gowing agree to meet for dinner and Gowing fails to turn up, the law will do nothing in the matter. The agreement was not intended to create legal rights and duties, and, as such, it is not a contract in law. Every contract is an agreement, but not every agreement is a contract.

  The object of the law of contract is to identify those agreements that it will enforce and those that it will not. This is of prime importance and will be referred to later in more detail.

  7.1 Essentials of a valid contract

  An agreement will be enforced when the following essential elements exist:

  (a) Offer and acceptance . There must be an offer by one party and an acceptance of it by the other.

  (b) Intention to create legal relations.

  (c) Capacity of the parties. Each party must have the legal capacity to make the contract.

  (d) Consent must be genuine. The consent must not be obtained by fraud, or duress (such as death threats if the contract is not entered into).

  (e) Consideration must be present (except in contracts under seal, i.e. by deed). See p. 123 for a definition of consideration.

  (f) Legality of object. The object of the contract must not be one of which the law disapproves.

  (g) Possibility of performance.

  All the above elements must be present. If one or more is absent the contract will be either (i) void, (ii) voidable or (iii) unenforceable.

  Void contracts are destitute of legal effect; that is, they are not contracts, and agreements of this kind do not confer legal rights on the parties thereto. For example, a contract by an infant to buy goods other than ‘necessaries’. Similarly, if A agrees with B to break into C ’s house and steal if B pays A £10, the contract is void for it is illegal. Neither party can recover from the other on a void contract, but goods delivered may be recovered by an action in tort because no property (ownership) passes. Money paid under the agreement may be recovered in quasi-contract (see p. 189 ).

  Voidable contracts

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  Essential GCSE Law

  • Kenny Chin(Author)
  • 2014(Publication Date)
  • Routledge-Cavendish

    (Publisher)

  4  Contract Law

  You should be familiar with the following areas:

  •    the essentials of contract and the effects of the absence of them

  •    rules relating to offer, acceptance and invitation to treat

  •    use of postal and other means of communication on offer and acceptance

  •    rules of consideration

  •    distinction of legal intention to contract on domestic and social agreements

  •    capacity of minors to make contracts and the effect of the Minors’ Contracts Act 1987

  •    discharge of contract by frustration and the effects of the Law Reform (Frustrated Contracts) Act 1943

  •    breach of contract and the remedies

  •    consumer contract and related provisions under various statutes

  •    duties of employer and employee, sex and racial discrimination in employment

  Introduction

  A contract is an agreement between two or more parties, who promise to give and receive something from each other and who intend that the agreement be legally binding. Except for some special contracts, for example, sale of a house, there is no general legal requirement that a contract has to be in writing. Verbal contracts are as enforceable as written contracts. The problem with verbal contracts is not on validity but on evidence. When nothing is recorded in black and white it is difficult to prove who has said what.

  Contract law is categorised in the law of obligation. A contract creates a legal obligation between the contracting parties. When one party has not fulfilled, or is not going to fulfil the obligation, he can be sued for breach of contract. The court will help the innocent party by either ordering damages suffered to be compensated, compelling the party in breach to perform the contract (specific performance order) or prohibiting the wrongdoer to act in a way which would cause further breaches (injunction order). It is therefore important to know how and when a binding agreement has been created. The following are six main essentials for a contract to be formed, they are:

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  Law and the Built Environment

  • Douglas Wood, Paul Chynoweth, Julie Adshead, Jim Mason(Authors)
  • 2021(Publication Date)
  • Wiley-Blackwell

    (Publisher)

  The Joint Contracts Tribunal (JCT) Standard Form of Building Contract and the Institution of Civil Engineers (ICE) form of engineering contract tend to govern major works, while other contracts such as the New Engineering Contract have come to play signi fi cant roles. These forms of contract are considered separately in paragraph 2.15. 2.4 The essential elements of a valid contract A simple contract has three essential elements: • Agreement (or at least the outward appearance of agreement). • Consideration. • The intention to create legal relations. 2.4.1 Agreement It is accepted that before a formal agreement can be reached there must be a valid offer made by the offeror and a valid acceptance of that offer by the offeree . It may be possible to ascertain with relative ease whether or not a valid agreement has come into being if a contract is entered into solely on the basis of what is agreed in a standard form of contract. It may be considerably more dif fi cult to ascertain whether or not an offer and acceptance have been made where, for instance, a contract is alleged to have come into being by a combination of statements made orally together with documents in writing. The real test is whether the parties have accepted obligations to one another. If that can be established then a valid agreement may be inferred from the conduct of the parties. The Law of Contract 55 In the case of Trentham (G Percy) Ltd v Archital Luxfer Ltd 2 a building sub-contract was held to have come into existence even though the parties had not reached full agreement when the sub-contractor began the work. During the progress of the works outstanding matters were resolved by further negotiations. The judge was satis fi ed in this case that there was suf fi cient evidence to conclude that there was a binding contract; the parties had clearly intended to create a legal relationship between each other.

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  Aspects of Civil Engineering Contract Procedure

  • R. J. Marks, R. J. E. Marks, R. E. Jackson(Authors)
  • 2013(Publication Date)
  • Pergamon

    (Publisher)

  LEGAL ASPECTS OF CONTRACTS Offer and Acceptance The Offer The basis of contract is agreement. Agreement is composed of an offer and an acceptance. In order to see whether a contract has been made the law looks to see whether one party has made an offer to do or refrain from doing something, and, if so, whether that offer has been accepted by the other party. The test which the law applies is an objective one: it looks at the parties' conduct, not their intentions. If one party makes a firm offer which is unequivocally accepted by the other, neither can afterwards contend that he did not intend to enter into a contract. 1 An offer, however, must be distinguished from a mere attempt to negotiate. The latter is called by lawyers an invitation to treat. An offer, if accepted, becomes a binding contract. An invitation to treat, on the other hand, is something which by its nature is incapable of being accepted or becoming binding without further negotiation. An invitation to tender sent by an employer to a number of contractors is generally an invitation to treat rather than an offer 2 , although it may be that by inserting words to the effect that the lowest tender will be accepted it might be turned into an offer capable of acceptance. It follows that the clause frequently inserted to the effect that the employer does not bind himself to accept the lowest or any tender is probably unnecessary. A document or something said by one of the parties may constitute an offer although the party putting it forward does not use the word offer. Estimates have frequently been these ways by inadvertence. The making of small sub-contracts by letter or by word of mouth is perhaps more common. 19 [ Falck v. Williams [1900] A.C. 176. 2 Moore v. Shawcross [1954] C.L.Y. 342. 20 CIVIL ENGINEERING: CONTRACT PROCEDURE held to be offers which become binding when accepted. 1 Whether or not a civil engineering contractor's tender is an offer depends upon its terms.

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  Contract Law

  • Chris Turner(Author)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

   Z 3.1 The nature and purpose of consideration 1 Contract law concerns enforcement of promises based on mutual agreement. 2 In the early forms of contract law (debt, detinue, covenant) proof that a binding agreement existed was easily found in the form of the agreement (i.e. was only binding if under seal). 3 Enforcing informal agreements developed in the sixteenth century with the law of assumpsit:  O the law would still not enforce merely gratuitous promises;  O so the law had to develop an element that could distinguish between a proper contractual agreement that would be enforced, and some- thing less that would not. 4 This was the origin of the element of consideration: a) Proof was required that the party seeking to enforce the contract was in fact a party to a mutual agreement by contributing something in return for the promise of the other party. b) This was the quid pro quo – one thing in return for another. c) In the sixteenth and seventeenth centuries, the courts asked for evidence of the existence of this extra element before they would acknowledge the existence of the agreement in law. d) Defining consideration was and remains a problem. 3 Formation of a contract: consideration and intention Defining consideration 29  Z 3.2 Defining consideration 1 Originally no single definition could be found. 2 Often the view taken was that consideration was no more than the reason why the promise should be enforced in the case. 3 It was first seen as a rule of evidence, and later as a moral obligation, neither of which makes consideration an essential in identifying a binding contract. 4 Nineteenth-century judges saw the essential difference between speciality agreements and ‘parol’ agreements ( Eastwood v Kenyon). Definitions • Benefit/detriment (Currie v Misa). • The promise of the one is the price for which the promise of the other is bought (Dunlop V Selfridge).

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  Islamic Financial Contracts

  A Research Companion

  • Hussain Mohi-ud-Din Qadri, Nasir Iqbal(Authors)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  6   Constitution or formation of a valid contract

  After explaining the meanings and definitions of Islamic contracts, now we explain how a valid contract is formed and what necessary elements or conditions are required for the formation of a valid contract in the Islamic law of contract.

  While reviewing the academic literature on the subject, it revealed that different authors and scholars described the constituent elements of an Islamic contract under different headings such as “pillars” or “main parts,” “salient features” or “main components” and “primary cornerstone” of a valid contract. Similarly, the number of these arkan vary with author or jurist; some authors opine that the number of these elements is three, whereas others say they are five in number. For example, Dr. Wahbah al-Zuhayli while explaining cornerstones of a sale contract describes how:

  For the majority of fuqaha’ , there are four cornerstones (arkan ) for a sale: the seller, the buyer, the language of the contract and its object. Those are also parallel to the cornerstones of all contracts. For the majority of jurists other than the Hanafis, the cornerstones of sale are either three or four:1 parties to the contract (buyer and seller), the object of the contract (price and what is priced), and language of the contract (offer and acceptance).

  We will not delve into this difference of opinion and will try to sum up all these and describe them in our own style. We shall discuss this under the heading of “essential Elements of a Contract.”.

  6.1 Essential Elements of a Contract

  Essential elements of a valid contract, as we explained earlier, are also known as components or pillars of a contract. In Arabic terminology, the word rukn is used for element or pillar. “The Arabic word rukn means pillar or supporter of something.”2 The plural of rukn is “Arkan .”. Hence Elements of a Contract are called “Arkan al-Aqd.” All the arkan together constitute a valid contract. The Arabic term “Takwin al-Aqd

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  Introduction to Law

  • Beth Walston-Dunham(Author)
  • 2019(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  19 The person promises or does something he or she is not obligated to do in exchange for a promise or performance he or she is not otherwise entitled to receive. The value of the consideration for the specific contract must be determinable. This is merely to ensure that a party is getting something of value in exchange for the prom -ise or performance. Essentially, such determination is required to prevent deception of innocent parties. The courts will not recognize a contract where the description of the consideration is vague or where the value of the consideration is incapable of being measured. The courts are not usually concerned with the amount of value of a consider -ation or whether one party benefits more than another; that matter is left for the parties to negotiate. The law does require, however, that a party to a contract be able to rea -sonably determine the value, quantity, and quality of the consideration to be received. This allows the party to make an informed decision as to whether to enter the contract. For consideration to be legally enforceable, it must be something that the law will recognize as a proper basis for a contract. Generally, this means that the consideration cannot be something that would be illegal or that would force the party to engage in illegal conduct. If, for example, one party promised another party $50 in exchange for stealing a typewriter, there would not be a valid contract. Because one party’s 496 CHAPTER 13 consideration is an illegal act, the fourth element necessary to establish a contract— consideration that supports a legally enforceable promise—is not met. In addition, the consideration must be something genuine. It does not matter that one party’s consideration is seemingly inadequate when compared with the other par -ty’s offered consideration; the law does not concern itself with the adequacy of consid -eration.

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