Chapter 1

CONTRACT
Law
Contract Law:
Nature and Classification
 Chapter 1
Chapter Outline
• 1-1 An Overview about Law & Contract
1-2 Elements of a Contract
• 1-3 Interpretation of Contracts
• 1-4 Case Study
Learning Objectives
1. What is Law & the objective theory of
contracts?
2. What are the four basic elements necessary to
the formation of a valid contract?
3. What is the difference between express and
implied contracts?
4. What rules guide the courts in interpreting
contracts?
The LAW –

the law is a set of rules that contain the

provisions which regulate the legal relations
between parties involved in the relevant contracts
or acts .
Such as Civil law ,Criminal law , Penal law ,
Constitutional law , Environment Law , Personal
law , Intellectual Property Protection law ,
Commercial law ,Business law , International
Public law , Maritime law , law of the sea …. Etc.
CONTRACT -
A contract is defined as an agreement
enforceable before the law.
EX: Contract of sale
Contract of lease

AGREEMENT –
Every promise or set of promises forming
consideration for each other.

PROMISE -
When a person made a proposal to
another to whom proposal is made if
OFFER
When a person made a proposal, when he
signifies to another his willingness to do or
to abstain from doing something.
EX: James makes an offer to buy a car from Andrew for $5,000.

AGREEMENT = OFFER +
ACCEPTANCE
Agreement Legal Obligation

Contract
“All contracts are agreements but
all agreements are not
contracts.”

CONTRACT = AGREEMENT +
ENFORCIBILITY BEFORE LAW
1-1 An Overview of Contract Law
1-1 An Overview of Contract Law
1-1c Definition of a Contract
A contract is formed by two or
more parties who agree to perform
or to refrain from performing some
act now or in the future. It can be
enforced in court.
Some of the entities that might
enter into a contract could
include:
•Organizations
•Individuals
•Corporations
•Companies
1-2 Elements of a Contract
1-2 Elements of a Contract
ESSENTIAL ELEMENTS OF A
VALID CONTRACT
1.Offer & acceptance.
2.Intention to create legal relationship.
3.Consensus - ad - idem.
4.Consideration.
5.Capacity to contract.
6.Free consent.
7.Legality of object.
8.Possibility of performance.
9.Writing & registration.
INVALID CONTRACTS

Void contract
Is void(Void - ab - initio)
Becomes void
Voidable contract
Illegal contract
Unenforceable contract
Invalid contract - In a contact if any one
condition is not fulfilled.
EX : unlawful consideration /incapacitated

Is void (Void-ab-initio) - An agreement

which is not valid from the beginning.
Becomes void - An agreement which is
valid in the beginning but due to some
supervening impossibility the
contract becomes void.
EX: Death
Voidable contract - A contract which is
valid unless until avoided by either the
party.
EX: Duress (force)
Illegal contract - An agreement forbidden
by law.
EX: drugs contarct

Unenforceable contract - It is valid but

due to some technical defect the contract
becomes void. In case defects are
removed the contract is
enforceable.(lack of registration, lack of
signature etc.,)
1-3 Interpretation of Contracts
1-3a Plain Language Laws
The federal government and a majority of the
states have enacted plain language laws to regulate
legal writing and eliminate legalese.
All federal agencies are required to use plain
language in most forms and written
communications.
States frequently have plain language laws that
apply to consumer contracts.
1-3 Interpretation of Contracts
1-3b The Plain Meaning Rule
Ambiguity: A court will consider a contract to be
ambiguous in the following situations:
1. Intent of parties cannot be determined
2. When it lacks a provision on disputed issue
3. A term is susceptible to more than one
interpretation
4. There is uncertainty about a provision
Extrinsic Evidence: Evidence that is not
contained in the document itself
1-3 Interpretation of Contracts
 1-5 Case study
Spotlight on
Interpretation of the
Agreement of 25
March 1951 between
the WHO and Egypt:
 WHO and Egypt : Case 1.1
OVERVIEW OF THE CASE
Having considered a possible transfer from Alexandria
of the World Health Organization’s Regional Office for
the Eastern Mediterranean Region, the World Health
Assembly in May 1980 submitted a request to the Court
for an advisory opinion on the following questions :
 WHO and Egypt : Case 1.1
OVERVIEW OF THE CASE
“1. Are the negotiation and notice provisions of Section
37 of the Agreement of 25 March 1951 between the
World Health Organization and Egypt applicable in the
event that either party to the Agreement wishes to have
the Regional Office transferred from the territory of
Egypt ?
2. If so, what would be the legal responsibilities of both
the World Health Organization and Egypt, with regard
to the Regional Office in Alexandria, during the two-
year period between notice and termination of the
Agreement ?”
The Court expressed the opinion that, in the event of a
transfer of the seat of the Regional Office to another
country, the WHO and Egypt were under mutual
obligation to consult together in good faith as to the
conditions and modalities of the transfer, and to negotiate
the various arrangements needed to effect the transfer with
a minimum of prejudice to the work of the Organization
and to the interests of Egypt. The party wishing to effect
the transfer had a duty, despite the specific period of
notice indicated in the 1951 Agreement, to give a
reasonable period of notice to the other party, and during
this period the legal responsibilities of the WHO and of
Egypt would be to fulfil in good faith their mutual
obligations as set out above.
 WHO and Egypt : Case 1.1
REQUEST FOR ADVISORY OPINION
Request for Advisory Opinion (including the dossier
of documents transmitted to the Court pursuant to
article 65, paragraph 2 of the Statute)
28 May 1980
Request for Advisory Opinion (including the dossier of
documents transmitted to the Court pursuant to article
65, paragraph 2 of the Statute)
Available in:
English / French
 WHO and Egypt : Case 1.1
WRITTEN PROCEEDINGS
Written Statements
15 July 1980
Available in:
English / French
ORAL PROCEEDINGS
Verbatim record 1980
Oral Statements (including Annexes) - Minutes of the
Public Sittings held at the Peace Palace, The Hague, on
21, 22 and 23 October, and on 20 December 1980, The
President, Sir Humphrey Waldock, presiding
Available in:
Original Language
OTHER DOCUMENTS
Documents received from the International Labour
Organization
8 September 1980
Available in:
English
ORDERS
Order of 6 June 1980
Fixing of time-limits: Written Statements
Available in:
English / French / Bilingual
ADVISORY OPINIONS
Advisory Opinion of 20 December 1980
Available in:
English French Bilingual
THANK
YOU