Lecture 01

Chapter 01
LAW OF CONTRACT
DEFINITION:
Contract law is the body of law that relates to making and enforcing agreements. A contract is an agreement that a party can turn to a court to enforce. Contract law is the area of law that governs making contracts, carrying them out and fashioning a fair remedy when there's a breach.
A contract is an agreement between two or more persons and which must be legally valid and enforceable.
(a) The parties to a contract must have consented freely and voluntarily, and must possess the legal capacity to contract.
(b) Any person with sound mind and over the age of 16 shall be deemed to possess the legal capacity to contract

Essential Elements of a Contract:

The requisite elements that must be established to demonstrate the formation of a legally binding contract are
(1) Offer and Acceptance
(2) Intention to Create Legal Relationship
(3) Capacity to Contract
(4) Genuine and Free Consent;
(5) Lawful Object
(6) Lawful Consideration
(7) Legal Formalities

Offer and Acceptance
Basically, a contract unfolds when an offer by one party is accepted by the other party. The accepted offer should be without any qualification and be definite. An offer needs to be clear, definite, complete and final. It should be communicated to the offeree. A proposal when accepted becomes a promise or agreement. The offer and acceptance must be ‘consensus ad idem’ which means that both the parties must agree on the same thing in the same sense i.e. identity of wills or uniformity of minds.
2. Intention to Create Legal Relationship
The intention of the parties to a contract must be to create a legal relationship between them. Agreements of social nature, as they do not contemplate legal relationship, are not contracts. For instance, if a father fails to give his daughter the promised pocket money, the daughter cannot sue the father, because it was purely a domestic arrangement. Thus, it is clear that all agreements, which do not result in legal relations, are not contracts.
3. Capacity to Contract
If an agreement is entered between parties who are competent enough to contract, then the agreement becomes a contract.
4. Genuine and Free Consent
Free consent is another essential element of a valid contract. An agreement must have been made by free consent of the parties. The contract would be void in case of mutual mistakes. When consent is obtained by unfair means, the contract would be voidable.
5. Lawful Object
Objectives of an agreement should be lawful. It must not be illegal or immoral or opposed to public policy. It is lawful unless it is forbidden by law. When the object of a contract is not lawful, the contract is void.
6. Lawful Consideration
Something in return is Consideration. In every contract, agreement must be supported by consideration. It must be lawful and real.
7. Certainty and Possibility of Performance
The agreements, in which the meaning is uncertain or if the agreement is not capable of being made certain, it is deemed void. T&C of the contract should always be certain and cannot be vague. Any contracts that are uncertain are considered void. The terms of the agreement must also be capable of performance and should not enforce impossible act.
8. Legal Formalities
Legal formalities if any required for particular agreement such as registration, writing, they must be followed. Writing is essential in order to effect a sale, lease, mortgage, gift of immovable property etc. Registration is required in such cases and legal formalities in the relevant legislation should be strictly followed