ELEMENTS OF A CONTRACT

OBJECTIVES: to understand the legal components that are necessary to form a legally binding contract to read and understand the relevant case law and appreciate the role it plays

INTRODUCTION: A contract is a legally enforceable agreement.This is an agreement which can be enforced in a court of law. The law of contract encompasses many areas of commercial law, eg agency, partnership, banking. The law of contract is traditionally based on common law and precedent, however legislation has had a significant impact, eg the Sale of Goods Act

MUST EVERY CONTRACT BE IN WRITING?

No, unless there is a specific requirement under either the rules of common law or equity or statutory law. Some contracts need only be evidenced in writing, whereas others must be in writing. See your textbooks for a list of examples of contracts which are required to be in writing to be legally valid. Parol Evidence Rule: Once evidenced in writing or actually in writing, the general rule is that no oral evidence can be raised in court to vary contradict or change the written document, however where there is ambiguity or uncertainty in the contract it will be possible to vary this rule. The Doctrine of Part Performance Equity will step in to rebalance any lack of justice in certain restricted contractual circumstances. What are these?

FORMAL CONTRACTS

Formal contracts (or deeds) are documents that create an obligation between the parties without the elements of the traditional contract being present, eg trust deeds, documents evidencing a gift.
Formal contracts are not generally found in business law

ELEMENTS - CONTRACT LAW

The elements of an enforceable contract are: (i) intention to create a legal relationship
(ii) agreement (offer and acceptance) (iii) consideration (iv) legal capacity (v) real and genuine consent (vi) legality of objects

ELEMENTS OF A CONTRACTINTENTION
(i) Intention: If the agreement is of a social or domestic nature, the presumption is that there is no intention that the parties intended to be legally bound, however this presumption can be rebutted. Read Balfour v Balfour, Cohen v Cohen, Merritt v Merritt (husband-wife agreements), Wakeling v Ripley Lottery winnings in shared tickets: Simpkins v Pays Parties to a commercial contract are presumed to intend to be legally bound by their agreement, however not all commercial agreements are legally binding. Carlill v Carbolic Smoke Ball Co [1893]. Rebutting the presumption-what does this mean? Honour clauses: If there is evidence to rebut the presumption that legal relations were intended then the courts will not enforce the agreement. Read Rose & Frank Company v Crompton & Bros Ltd, Jones v Vernon Pools Ltd.