Contracts

A contract is a legal agreement that is enforced by law with specific terms between two or more entities, in which there is a promise to do something in return for a valuable benefit

IMPORTANCE

• to create a clear legal agreement between parties

• it limits the potential failure of deliverance by the other party

SIMPLE CONTRACTS

A simple contract is where there is an offer and acceptance of terms. It is legally binding but the contract doesn’t have a deed

Ex.

1. Rental Agreement

2. Employment Contract

3. Purchase of Goods

ELEMENTS

• Legality - (being in accordance with the law ) For contracts, the intent is to enter a legally binding agreement

• The Offer - a promise which, according to the terms set out, becomes legally enforceable if accepted

• The Acceptance - an act that indicates assent to the terms of the offer

CHARACTERISTICS

• Offer & Acceptance - One party makes an offer offeror, that is then agreed to by the other party offeree. this creates a binding contract

• Consideration - A promise or action made by one party for the promise or action made by another.

• Competence of Parties - Parties should be adults of sound mind.

• Intention to Create Legal Relations - this is when the parties intend to enter a legally binding agreement or contract

SPECIALITY CONTRACT

A specialty contract is a legally binding (under seal ) agreement that is unique and specific to a particular situation or industry.

CHARACTERISTICS

• This contract is underseal

• It is more serious and official than a simple contract

• Involve large sums of money or considerable obligations and terms

• In writing or printed and will be sealed

• Very clear and cannot be got of be an unscrupulous party

ELEMENTS

• The contract must be signed by both parties and sealed

• A deed or contract must be delivered by the offeror

KEYWORDS

• Offer is a proposal made by one party to another, establishing their willingness to enter into a legally binding agreement

• Acceptance is the act of agreeing to take up an offer (Acceptance is the agreement made to accept the terms and conditions in the contract.)

• Under Seal means that a contract that is executed with formalities such as a seal, signature or witnesses

DISCHARGE AND TERMINATION

Discharge of a Contract

• This occurs when the obligations on the parties to the contract have been met

Methods of Discharge

• Performance

  This is the most common type of discharge and it occurs when both parties fulfill their obligations in a contract

  • Complete Performance - every term and warranty has been completed

  • Substantial Performance - the terms of a contract have been substantial fulfilled, only minor details haven’t been completed

  • Partial Performance - only one element of the contract has been fulfilled

• Breach

  This occurs when a party named in the contract fails to complete its part of the contract

  Anticipatory Breach - when one party declares that they will not be completing all of their obligations ( before the performance due)

  Actual Breach - when one party does not fulfill all of its obligations at the end of the contract or terms are partially met ( on the date its due)

• Agreement

  The parties in a contract may agree a point at which the contract will be terminated

• Impossibility

  If it is impossible to perform a contract from the outset, then it is void

• Lapse of Time

  A contract will be deemed to be discharged if its not enforced within a specified time period

• Death

  Contracts will be discharged if a party dies