A contract is an agreement between two or more persons which is intended to be enforced by law.
It is an agreement between two or more parties which is intended by them to have legal backing. It is an agreement creating an obligation i.e. a legal agreement between two parties. All contracts, therefore, involve some sort of agreement, but not all agreements are contracts.
Classification of Contract
Contract can be classified into; Formal and Informal contract
Formal contract includes contract of deed (specialty contract) and contract of records.
Informal contracts are simple contracts which must possess all the essential characteristics of a valid contract.
Essential Elements of a Contract
To be valid, a contract must possess these essential ingredients:
A. Offer and Unqualified Acceptance: In a valid contract, a definite offer must be made by one party to the other and the offer must be unconditionally accepted.
Characteristics of an Offer
- An offer may be made to a specific person
- An offer may be expressly made or implied by the conduct of the parties
- An offer must not be mistaken with the answer to a question or the supplying of information.
- An offer must be communicated to the offerer
Termination of an Offer
- Revocation i.e. withdrawal of the offer
- A refusal or counter offer
- Lapse of offer
- When the offerer notifies the offeror that he does not wish to accept the offer.
B. Intention to create legal relations
C. There must be valuable consideration
D. Genuineness of consent
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