Characteristics of a Simple Contract

There must be offer and acceptance. The offerer is the party that makes the offer and the offeree is the person that the offer is being made to. There must a clear offer and clear acceptance for a contract to be binding.

Consideration is the price paid by one party for the promise of the other. Thus if one party promises to provide goods or services, something of value must be given in exchange. This may be in the form of money, goods, services or it may be an act of forbearance.

The capacity to contract – Parties to the contract must be over 18 years, of sound mind, not under the influence of drugs or incarcerated.

There must be no force, misrepresentation or fraud. Persons should not be forced to sign a contract e.g. blackmail. They should not be lied to e.g. giving the wrong year of a car. Fraud may involve forging someone’s signature.

There must be an obvious intention to create legal relations.This is based on the actions of the parties e.g. offer, acceptance and consideration.

A contract must be legal- thus, agreements made between parties concerning illegal drugs and any other illegal activity is not a contract.

Previous | Next