As humans, and in a fast growing society, we deal in all manner of transactions. We buy phones, cars, and other variants of properties. All of these transactions are often documented via contracts. Since contract confers rights and obligations on the parties, it is important to have an effective insight into what constitutes the basics of contract law.
Meaning of A Contract
A contract is an agreement which the law recognizes, conferring rights and obligations on the parties to it. It is an agreement which is binding in law and which the law court will enforce.
This definition suggests that not all agreements qualify as contracts. For example, most domestic agreements are not binding in law and cannot be called contract.
Types of Contracts
There are different types of contracts. They might be formal contract or informal, express or implied.
A formal contract is one which is under seal. It is usually written and sealed.
Informal contract, on the other hand, is one which is not under seal. It may be written but it usually has no seal. Thus, that an agreement is not written does not mean that it is not enforceable in law.
An Express contract is one in which the rights and obligations of the parties are clearly stated. This way, it is easy to know when the contract is breached.
Implied contract is one which does not clearly state the terms (rights and obligations). In this case, the court usually infers the terms of the contract from the conduct of the parties rather than clear terms written in a legal document.
Elements of a Valid Contract
The four basic elements of a valid contract are offer, acceptance, consideration, and intention to enter into legal relations.
An offer is a promise made by one party to the other with the intention that such promise shall become binding once the contract is established. For instance, if an individual named A goes to another named B to propose to buy his piece of land for a Million Naira, that is an offer.
Acceptance is an act of compliance with the terms of the offer proposed. Where B agrees to sell his piece of land upon A’s offer for the said One Million Naira, there is an acceptance from B.
Consideration is the substance of value which accrues to the parties to the contract. In our earlier example, A promised to buy B’s piece of land for a Million Naira. The One Million Naira is known as the consideration which B gets from the land.
Finally, for the contract to be valid, the parties must have the intention to be bound by law in the contract. Where the parties do not have the intention to be bound by law, such contract is said to be invalid for absence of intention to enter into legal relations.
This blog post sheds some light on essentials of a contract.
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