This article is published in good faith. ‘Legal Aware’ is not responsible for the truth or accuracy of this information in the English jurisdiction, but is to the best of his knowledge a substantially correct account of the law at present. It does not constitute professional advice, for which the advice of a practising barrister or solicitor should be sought.

Meaning, and basic elements of a contract

Save for lawyers, only a handful of people perfectly understand what makes an agreement a contract; thus, making it legally binding and enforceable in a court. This article is intended to explain the fundamental principles better.

A contract is fundamentally an agreement between two or more parties, intended to create legal relations, which the law acknowledges as legally binding and will enforce in the event of a breach.

We live in a society where we must interact and in our day-to-day interactions we cannot help but enter into agreements. However, even though contract law evolved to regulate this aspect of human endeavour, thereby ensuring that parties to a contract fulfill their promises, and contractual obligations, this arm of the law will not concern itself with mere agreements, meaning agreements that do not have a binding nature must not be fulfilled. In the event of a breach of such agreements the law will not enforce it.

For example, a court will not enforce a promise made by a man to his son to buy him a car if he learns to cook in the event he does not fulfill his promise. Once again, the law does not recognize promises and agreements in which the parties did not intend to create legal relations. Furthermore, for a contract to be legally enforceable it must include the following: consent of the contracting parties, consideration, parties capable of contracting, and a legal object.

Consent of the contracting parties: The existence of this element is a prerequisite for a valid contract, meaning for a contract to actually exist, consent must be sought and obtained. Both parties to the contract must communicate to each other unambiguously, the nature of the contract, the terms, the subject matter, and everything else that is relevant to the contract. This is usually referred to as a “meeting of the minds”. There has to be an offer by one of the parties (referred to as the offeror) and an acceptance by the other party (referred to as the offeree). A counter offer does not signify acceptance.

For instance, if an offeror proposes to sell his car for a certain price and the offeree counter-offers, this would signify rejection of the initial offer, and should the offeror sell his car to a different person at a different price, the offeree does not possess the right to enforce the initial offer as no contract was made.

Any consent that is obtained through fraud, duress, misrepresentation, undue influence, mistake is not out of freewill, thus, voidable. Apparently, if I sign a contract because I was deceived, I never consented to it in the first place, therefore, I can rescind it. A lot has been written extensively on this. Sometimes, cases regarding this are usually not that straight forward, but do not be dismayed, it is the role of the courts to interpret each specific or particular case. It is advisable to always contact a lawyer before you enter into a contract.

Consideration: This is equally a prerequisite for all valid contracts. This is the price for which the offer is bought. For instance, in a “buyer” and “seller” situation; the buyer receives the goods and the seller receives payment. All parties to a contract must make gains. If Mr. A sues Mr. B for breach of contract without proof that he had furnished consideration (proof that Mr. B had gained something), he will not succeed, because Mr. B has not received any consideration. Sometimes, cases bothering on this issue are always not that open-and-shut. It is usually the role of the court to decide.

Parties capable of contracting: The law prohibits minors, people of unsound mind and drunken person, illiterates from contracting. The contract must identify the parties, first by their names. And sometimes, titles like “Buyer” and “Seller” could be used to further describe the contracting parties. Copious materials that extensively explain this subject, have been documented.

Legal Object: The object or subject matter of a contract must be legal. A contract for the sale of stolen vehicles will not be enforced by the court should there be a breach.

It is important to know that whether your contract is a written or  an oral contract, it must include the elements stated above for it to be legally binding and enforceable. Thus, an oral contract can be enforceable if it meets these requirements. However, the validity of certain contracts is hinged on the fact that they be in writing; in such cases they must documented to be legally binding. However, you will be well advised to always document your contracts. It is advisable to always insist that the contract is in writing for evidential basis.

A written contract always serves as a proof that a contract exists in the event of a breach. Always seek the advice of a lawyer before you append your signature to contract papers regardless of how simple the contract is, or how small the contract amount is.

(c) Aniebiet Ubon 2013.

The copyright of the text of this article is owned by the author Aniebiet Ubon. The content of this article, in whole or in part, may not be copied, reproduced, republished, downloaded, posted, broadcast or transmitted in any way without first the explicit permission of the owner and author.

Aniebiet D. Ubon LL.B (Hons), BL (in view) is an independent writer and researcher in the field of law, with special interests in contract law, international law and human rights. He also writes about issues regarding world peace, Education, Politics, Human rights and societal development; He is also a Radio/TV commentator and analyst legal, education, political and societal development.

Ubon is the Founder of the Qualitative Universal Education and Legal Literacy Initiative (QUELL), an movement for young citizens campaigning for the right to free, compulsory primary education for all; the development of secondary and tertiary education available and accessible to all; and the improvement of the quality of our educational system. QUELL also aspires to promote legal awareness.

Contact email: aniebietubon@gmail.com. Twitter: @aniebiet11