Contract - Elements of a Contract
Contract: the elements of a contract
The first step in a contract question is always to make sure that a contract actually exists. There are certain elements that must be present for a legally binding contract to be in place.
The first two are the most obvious:
It is very important to distinguish an offer from an invitation to treat – that is, an invitation for other people to submit offers. Some everyday situations which we might think are offers are in fact invitations to treat:
N.B: an offer can be revoked at any time before it is accepted, so long as you inform the person you made the offer to that the offer no longer stands.
This is best illustrated by an example: suppose I promise to give you my watch, but you don’t give me anything in return. If I break my promise and keep my watch, you can’t then go to court and make me give it to you. The contract isn’t legally binding: you didn’t give me any consideration for my promise.
So put simply, consideration is the price paid for the other’s promise.
There are four legal maxims that apply to consideration:
The detail isn’t necessary here, but there is a separate note on them if you’re interested.
In general, arrangements of a social nature are presumed not to be legally binding, whilst commercial arrangements are presumed to be intended as binding contracts. Of course, these presumptions can always be rebutted in court by producing evidence to the contrary.
|For Reference: Author: Deborah Smithies, August 2007|