Contract Law Essentials

Offer and Acceptance

• Offer: A proposal made by one party to another, indicating a willingness to enter into a contract.
• Acceptance: The unconditional agreement to the terms of the offer, resulting in a binding contract.
• Key elements:
  • The offer must be clear and definite.
  • The acceptance must be unconditional and mirror the terms of the offer.
  • The acceptance must be communicated to the offeror.

Consideration

• Consideration: Something of value given in exchange for a promise, necessary for a contract to be enforceable.
• Types of consideration:
  • Executory consideration: A promise to do something in the future.
  • Executed consideration: An act performed in exchange for a promise.
• Key elements:
  • Consideration must be sufficient, but not necessarily adequate.
  • Consideration must be given in exchange for a promise.

Capacity

• Contractual capacity: The legal ability to enter into a binding contract.
• Groups with limited capacity:
  • Minors (under 18): Contracts are generally voidable.
  • Mentally incapacitated individuals: Contracts are generally voidable.
  • Corporations: Have the capacity to enter into contracts through authorized agents.

Privity of Contract

• Privity of contract: The rule that a contract only affects the parties who are directly involved in the contract.
• Key element:
  • Only parties to the contract can enforce it or be bound by its terms.

Intention to Create Legal Relations

• Intention to create legal relations: The requirement that parties intend to enter into a legally binding agreement.
• Key elements:
  • Parties must intend to create a legally binding agreement.
  • Social or domestic agreements are generally not considered to have the intention to create legal relations.

Sanctity of Contracts

• Sanctity of contracts: The principle that contracts are binding and should be enforced.
• Key element:
  • Contracts are presumed to be legally binding and enforceable.

Illegality

• Illegality: A contract that violates the law or public policy is unenforceable.
• Key elements:
  • Contracts that promote illegal activities or violate public policy are void.
  • Contracts that violate statutory laws or regulations may be void or voidable.

Contractual Capacity and Agreement

• Contractual capacity: The ability to enter into a binding contract.
• Agreement: The mutual understanding and consent of the parties to the contract.
• Key elements:
  • Parties must have the capacity to enter into a contract.
  • Parties must have reached a mutual understanding and consent to the contract terms.

Performance

• Performance: The fulfillment of contractual obligations.
• Key elements:
  • Parties must perform their contractual obligations in accordance with the contract terms.
  • Failure to perform may result in contractual breach and legal consequences.