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Definition of a Contract
Agreement
Agreement/Obligation
Type of Agreement/Obligation Whether the law of contract covers such
agreement/obligation
1. Agreements where the parties intend YES
to create legal obligation
2. Agreement where the parties do not NO
intend to create legal obligation eg. Social
agreements
3. Obligations which arise out of YES
agreements
4. Obligations which do not arise out of NO
contract
Essential Elements of a Contract
1. Offer and Acceptance
2. Consideration
3. Free Consent
4. Capacity to contract
5. Lawful object
6. Certainty and Possibility of Performance
7. Term of contract should be clear
8. Agreement not to be declared void
9. Legal formalities
Legal rules for a valid offer
• Rule # 1 : Intention to create legal
relationship