Friday, January 25, 2008

Basic Elements of Contract

A contract means "...an agreement between 2 parties to do or not to do something ... legal obligation and not moral obligation ...it can be between 2 person, corporate, entity etc, but the minimum is 2 and the maximum is endless.."

In simple means, a contract is formed when 2 or more parties agree to enter into legally binding agreement. A legally binding agreement is an agreement which is not illegal(against the law), immoral(against the moral values) and moral(mere promise).

All contracts are governed by Contract Act 1950. The provision of Contract Act 1950 & Contracts (Amendment) Act 1976 must prevail compare to case law (precedents) or equity (fairness).

In order to form a legally binding contract, the following seven elements must be met:
a) Offer
b) Acceptance
c) Consideration
d) Certainty
e) Capacity
f) Consenting Mind
g) Intention to create legal relation

Without one of the above elements, a contract will become void.

The formulas of contract are:

i) Offer+Acceptance = Agreement
ii) Offer+Acceptance+Consideration = Contract
iii) Offer+Acceptance+Consideration+Consenting Mind+Certainty+Capacity+Intention to Create Legal Relation = Full Brown Contract

1 comment:

Anonymous said...

Can you explain more on consideration and its connection to section 2(d) and 26..i have trouble finding info on it