formation of contract
Part 1
THE FORMATION OF
A CONTRACT
There are five basic requirements that need to be satisfied in order to make a contract:
●
An agreement between the parties (which is usually shown by the fact that one has made an offer and the other has accepted it).
●
An intention to be legally bound by that agreement (often called intent to create legal relations).
●
Certainty as to the terms of the agreement.
●
Capacity to contract.
●
Consideration provided by each of the parties – put simply, this means that there must be some kind of exchange between the parties. If I say I will give you my car, and you simply agree to have it, I have voluntarily made you a promise (often called a gratuitous promise), which you cannot enforce in law if I change my mind. If, however, I promise to hand over my car and you promise to pay me a sum of money in return, we have each provided consideration.
In addition, in some cases, the parties must comply with certain formalities.
Remember that, with a few exceptions, it is not necessary for a contract to be in writing – a contract is an agreement, not a piece of paper.
In this part of the book we will consider these different requirements for the creation of a contract.
1
Offer and acceptance
This chapter discusses:
●
the formation of a contract by one party making an offer which is accepted by another party;
●
the distinction between unilateral and bilateral contracts; ●
the distinction between an offer and an invitation to treat; ●
how long an offer lasts;
●
what amounts to a valid acceptance; and
●
the requirement that an acceptance must be communicated along with the postal rule exception.
Offer
or a contract to exist, usually one party must have made an offer, and the other must have accepted it. Once acceptance takes effect, a contract will usually be binding on both parties, and the rules of offer and acceptance are typically used
THE FORMATION OF
A CONTRACT
There are five basic requirements that need to be satisfied in order to make a contract:
●
An agreement between the parties (which is usually shown by the fact that one has made an offer and the other has accepted it).
●
An intention to be legally bound by that agreement (often called intent to create legal relations).
●
Certainty as to the terms of the agreement.
●
Capacity to contract.
●
Consideration provided by each of the parties – put simply, this means that there must be some kind of exchange between the parties. If I say I will give you my car, and you simply agree to have it, I have voluntarily made you a promise (often called a gratuitous promise), which you cannot enforce in law if I change my mind. If, however, I promise to hand over my car and you promise to pay me a sum of money in return, we have each provided consideration.
In addition, in some cases, the parties must comply with certain formalities.
Remember that, with a few exceptions, it is not necessary for a contract to be in writing – a contract is an agreement, not a piece of paper.
In this part of the book we will consider these different requirements for the creation of a contract.
1
Offer and acceptance
This chapter discusses:
●
the formation of a contract by one party making an offer which is accepted by another party;
●
the distinction between unilateral and bilateral contracts; ●
the distinction between an offer and an invitation to treat; ●
how long an offer lasts;
●
what amounts to a valid acceptance; and
●
the requirement that an acceptance must be communicated along with the postal rule exception.
Offer
or a contract to exist, usually one party must have made an offer, and the other must have accepted it. Once acceptance takes effect, a contract will usually be binding on both parties, and the rules of offer and acceptance are typically used