The essentials of a valid contract
A contract is an agreement between two or more parties in which legal obligations are created which are enforceable by law. Legal contracts are used to formalise agreements amongst all levels of society. In fact, throughout your personal life you will enter into thousands of contracts. They can be as complex as purchasing a business or home or as simple as dropping off your dry cleaning. A well written contract is the best protection should a dispute arise.
There are four main elements to a contract:
1. The offer (one party makes an offer to another: if rejected the offer automatically ends)
2. The acceptance (the other party must accept the offer without conditions)
3. The consideration (the amount each party agrees on, ie: the price of the promise)
4. The intention (the parties entering into the contract must intend to create legal relations)
• All parties involved must have the legal capacity to enter into the contract. Parties who do not have capacity to enter into contracts include minors, the mentally disabled, prisoners, or the intoxicated etc
• Some types of contracts must meet certain formal requirements; for example, a contract for the sale of land must be in writing.
• Each party’s consent to the agreement must be genuine or else the contract’s validity may be affected by one or more aspects that the courts consider as vitiating (removing any real consent between the parties). The contract is not valid if a mistake or misrepresentation was made, a party was under duress or undue influences or if it was unconscionable.
• The person seeking to enforce the contract must be a party to it (there must be privity of contract between them).
• To the extent that the objects or purposes of the contract are contrary to law, the court will not enforce it.
Always seek professional advice before committing yourself to a legally binding contract. Here at The Quinn Group, our legal team has vast experience in all facets of contract law from drafting simple employment contracts to major procurement contracts. For more information on about the validity of contracts, contact us today to speak with one of our team about your legal queries on 1300 QUINNS or submit an online enquiry.