The Basic Law Of Contract

Question 1

Define what a contract is

Answer 1

1. An agreement creating and defining the obligations between two or more parties
   I.e When two or more parties agree on something (like hiring a service), the contract spells out what each side must do and their rights.
2. For a contract to be considered legally binding, the elements of offer and acceptance must exist.
   I.e. A contract must start with an offer (one party proposes something) and an acceptance (the other party agrees to it without changes).
3. The origin of a contract or agreement will begin with an offer and after the offer is accepted unconditionally, the contract is then formed

Question 2

Define Acceptance with regards to a contract

Answer 2

1. After an offer - there must be willingness from the accepting party to enter into the contract
2. For the contract to be complete - there must be specific terms and conditions set out and accepted.
3. Once the terms and conditions have been offered and accepted and, no further negotiations are intended - the contract can be said to be complete or full

Question 3

Define Consideration with regards to our contract

Answer 3

1. Consideration is what each party gives or promises in a contract. It’s the exchange of something valuable like money, goods, or services that makes the contract legally binding.
2. Contracts Need Consideration to Be Enforceable –
   A contract might not be legally valid if one party gives something and the other gives nothing in return.
3. Mutual Exchange –
   Both sides must offer something of value

Question 4

Define Intention with regards to a contract

Answer 4

1. For an agreement to be a legally binding contract -
   A. both parties must have the intention to create legal obligations.
   B. they must have meant for the agreement to be enforceable by law.
2. No Intention = No Contract –
   A. If two parties agree on something without the intention of making it legally binding, it won’t be considered a contract in court.
3. Commercial vs. Social Agreements:
   A. Business/ Commercial contracts - the law assumes contracts are meant to be legally binding unless proven otherwise.

B. Social & Domestic Agreements – If friends or family make a casual agreement (like promising to buy dinner), it’s not usually a contract because there’s no legal intention.

3. Proving Lack of Intention –
   If one party claims there was no intention to form a contract - they must provide clear written evidence (e.g., a disclaimer stating “this is not legally binding”).

Question 5

Define what terms and conditions are

Answer 5

1. If a contract dispute is brought to the law courts - strong emphasis will be placed on the terms and conditions of the contract
2. A contract cannot be set to be complete of the terms and conditions are not fully laid out.
3. The conditions cannot be vague or ambiguous.
4. A contract is usually not seen as legally binding if the terms and conditions are unclear.
5. Usually, the judge may try to clarify the terms and conditions of a disputed contract.

Question 6

What are the different types of contract?

Answer 6

1. In some cases, a contract may still be upheld/ valid if it’s made orally
2. In certain circumstances like a sale of a property or tenancy agreement - the contract must be in writing
3. If a contract dispute reaches the courts and there is no written contract or statement - the judge may look into how services, promises and exchanges were carried out practically in order to make a decision

Question 7

Contract discharge

What are the different ways in which a contract can come to an end?

Answer 7

1. Performance
   The obligations of the contract have been accomplished by both parties and there’s nothing more to do
2. Agreement
   Both parties agreed to end the contract, or one party releases the other party from the agreement
3. Frustration
   Occur occurrence of events that make the completion of the contract impossible, and the obligations of the contract could not be met
4. Breach
   A. When one party doesn’t fulfil one or more of the specified terms and conditions OR,
   B. The work carried out as defective OR,
   C. One or more party makes the other aware that they will not be carrying out the agreed work
   D. This can be taken to the court and the innocent party can be awarded.
   E. Financial damages are only awarded if the innocent party can prove financial loss
   F. Court costs and solicitors’ fees should be weighed up against the likelihood of any damages being awarded before proceeding with court cases