Contracts and Classification of contracts, offer and acceptance
A contract can simply be defined as a legal binding agreement between two or more persons enforceable by the court or creating rights and obligations.
For a valid contract to be established, there are some vital elements that must be presence. These elements are:
- Offer
- Acceptance
- Consideration
- Intention to create legal relationship
- Capacity
- Legality
- Consent
- Possibility of performance
OFFER
An offer is the willingness to enter into a contract. The person who makes an offer is called an offeror. An offer must be communicated, clear and must be distinguished from an invitation to treat.
An invitation to treat is a call for someone to make an offer
How can an offer be terminated
An offer can be terminated in various ways
- Revocation: the person making an offer can at any point in time withdraw the offer. This implies that the offer has been revoked.
- Laps of time: an offer will expire at the end of the time limit for which the offer was made.
- Death of the offeror
- Acceptance
- Counter offer
ACCEPTANCE
Acceptance of an offer is the unconditional agreement to all the terms of an offer. In other words it can be said to be the willingness to be bound by the terms of an offer. Acceptance can be made orally, in writing or by conduct of the offeree. Silence in law is always interpreted as acceptance. The person who accepts an offer is called the offeree
Characteristics of acceptance
- Acceptance must be unconditional
- Acceptance must be communicated
CONSIDERATION
Consideration is the price of the contract. There are two types of considerations. Executed and executory consideration. Executed consideration is a consideration that has been fulfilled while the executory is a promise to be fulfilled in the future
CAPACITY
For a contract to be valid, the contracting parties must be of required age and of sound mind. This implies that, minors are not allowed to contract. However, there are certain types of contract in which if minors engage in them, they will be considered as valid.
These contracts are called contract of necessaries. Necessaries are goods that are considered to be valuable to the wellbeing of the minor
LEGALITY
For a contract to be valid, the subject matter of the contract must be valid before the law.
CONSENT
For a contract to be valid, the contracting parties must freely express their mind free from duress and undue influence
POSSIBILITY OF PERFORMANCE
Here, contracting parties should be able to discharge their obligations as stated in the contract
CLASSIFICATION OF CONTRACTS
- Bilateral contracts
These are contract that involve only two persons
- Multilateral contract: these are contract that involve more than two persons.
- Unilateral contracts: These are contract that involve only one party
- Void contract: this is a contract in which neither party can recover from another
- Voidable contract: This is a contract in which one of the contracting parties have the option either to avoid the legal relationship created by the contract or validate the contract by ratification.
- Unenforceable contract: these are valid contracts that cannot be enforced by the court because they lack some technical requirements.
VITIATING ELEMENTS OF A CONTRACT
These are elements that can transform a contract from valid to an invalid contract. A contract may meet the necessary formation requirements of offer acceptance, consideration etc. but still not binding because of some other necessary factors. These factors invalidate the contract and are termed vitiating elements. They include:
Misrepresentation; it is a false statement of fact which induce the other party to enter into a contract. The statement made may be oral, written or by conduct. Misrepresentation can be classified under fraudulent, negligent and innocent misrepresentation
Mistakes: These are common errors in a contract. There are two types of mistakes; common mistakes and unilateral mistakes. Common mistakes is a situation where both parties make the same errors
Duress: this is when threat and violence is used on someone to enter into a contract
Undue influence: this is influence that denote excessive pressure which does not give opportunity to the other party to act independently
Illegality: a contract can be illegal because of its purpose or the subject matter of the contract is not recognize by the law
PRIVITY OF CONTACT
The principle of privity of contract states that, a party who was not part of the contract cannot sue or be sued in a contract
BREACH OF CONTRACT
A contract is breached if one of the party breaks one or more of the terms of the contract or indicate in advance that he does not entail to perform the contract.
We can also say that a breach of contract is where one party fails to perform its own part of the obligation as was stated in the contract. When one party suffers from a bridge of contract from the other party, the party who suffers (the injured party) is exposed to a lot of remedies
Remedies of breach of contract
Payment for damages: These are monetary compensations aimed at putting the injured party in the position that they would have been if the breach had not occurred.
Damages are of two types; specific and general damages.
Specific damages are damages that have monetary values while general damages are damages that cannot be equated to monetary value. For example psychological trauma and emotional stress
Specific performance: it is an order from the court requesting one party to a contract to perform his own part of the obligation as was stated in the contract.
Injunction: It is order from the court preventing one party from doing something
Discharge of a contract (termination of a contract)
A contract can be discharged or terminated in the following ways:
By agreement: what was agreed by parties can be set aside by the parties themselves by ways of mutual agreement
By performance: this is when each of the parties to the contract has carried out what he or she was supposed to do.
By breach: a contract is said to be breach if one party to a contract fails to perform its own part of the obligation
By frustration (act of God or force majeure): a contract may come to an end by no fault from the parties but by happening beyond their reasonable contemplation or understanding which prevented them from performance e.g. rain thunder wind landslide etc.
By operation of the law: when we talk of a contract coming to an end or discharged by the law, we mean dead of one of the contracting party and lapse of time.
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