Contracts

A contract is a legally binding agreement between two or more parties enforceable by

law.

Characteristics
● It must be legal
● Neutral agreement
● Considerations (conditions must be beneficial to all parties)
● Capacity (being able to meet the conditions)
● Good faith (all parties must be honest or freely enter into the contract)

Types of Contracts
- Simple
- Speciality

Simple Contracts
An agreement between two or more parties, it needs no special form; it may be by word
of mouth, in writing, or it may be implied by conduct.
Eg: buying goods,

Speciality Contracts/ Contracts By Deed/ Contracts Under Seal

These are a more formal type of contract often written on a special form and they have
three requirements: signature, sealing and delivery

Signature: All parties involved must sign the contract

Sealing: The contract must be attached with some form of raised seal.
Delivery: The contract is placed/touched by the person to whom it is delivered. All
parties must have a copy of the contract

Examples:
● Mortgage
● Will
● Insurance
● Businesses trying to merge

Parties of A Contract
- Offerer
 - Offeree
- Acceptor

Possible Terms Of A Contract

Offer
A proposal made by an offerer to an offeree to benefit both parties

Acceptance
Agreeing to fulfil the contract by the offeree

Counter Offer
When the offeree doesn't agree with the contract and they, the offeree, come up
(propose) something else to the offerer and become the offeree.

Invitation to Treat
An invitation to make an offer. It is a statement which is intended to persuade someone
else to make an offer. (eg: a bid)

Possibility
This means that within the context of consideration, the parties in a contract must be in
a position to deliver the requirements of a contract.

How to Terminate/Discharge a Contract

This refers to the termination (release) of contractual obligations.

Methods:
● Death
● Performance (fulfilling the agreement)
● Breach of contract
● Lapse of time
● By mutual agreement
● Impossibility
● By merger (1st contract ends, new one begins)

Mistakes and Misrepresentation

A contract can become void (invalid) if there are mistakes in the contract procedure.
Sometimes the details of the agreement are misrepresented by giving a false or
misleading account, usually with an intent to deceive.

Types of Mistakes
- Common
- Unilateral
- Mutual

Common Mistakes
These occur when the parties of a contract agree on the subject of the contract but
both parties are equally mistaken about some aspect of the contract.

Unilateral Mistakes
Only one of the parties is mistaken in the contract agreement, whereas the other party is
not mistaken.
Eg: fraud

Mutual Mistakes
An incorrect assumption which both parties assume to be true at the time of agreement.