Contract

Presented by:
Presented by:
Derin K John
Derin K John
Trevor Fernandes
 What is Contract
• A contract is a legally enforceable
agreement between two or more parties
with mutual obligations.
• It is the voluntary, deliberate, and legally
enforceable (binding)
agreement between two or
more competent parties.
• A contractual relationship is
evidenced by
1. an offer,
2. acceptance of the offer,
3. a valid (legal and valuable)
consideration.
 Each party to a contract
acquires rights and duties relative to
the rights and duties of the
other parties.
 Contracts are normally enforceable
whether or not in a written form
 Origin And Scope

• Contract law is based on the principle

expressed in the Latin phrase pacta sunt
servanda, which is usually translated
"agreements to be kept" but more
literally means "pacts must be kept".
 Contract Theory

• Contract theory is the body of legal

theory that addresses normative and
conceptual questions in contract law.
One of the most important questions
asked in contract theory is why
contracts are enforced.
• Offer and acceptance
The most important feature of a contract
is that one party makes an offer for an
arrangement that another accepts. This
can be called a concurrence of
wills or consensus ad idem (meeting
of the minds) of two or more parties.
• Consideration
Consideration is something of value
given by a promissor to a promisee in
exchange for something of value
given by a promisee to a promissor.
 Formation :
In addition to the elements of a contract:

• a party must have capacity to contract;

• the purpose of the contract must be
lawful;
• the form of the contract must be legal;
• the parties must intend to create a legal
relationship; and
• the parties must consent.
 Affirmative defences
Vitiating factors constituting defences to
purported contract formation include:
 mistake;
 incapacity, including mental
incompetence and infancy/minority;
 duress;
 undue influence;
 unconscionability;
 misrepresentation/fraud; and
 frustration of purpose.
 BILATERAL
A promise for a promise
UNILATERAL
VALID A promise for an act
A contract that has all the EXPRESS
nec. Elements
Formed by words
VOID
No contract w/out legal IMPLIED IN FACT
obligation
Formed at least in
VOIDABLE part by the parties
A contract where a party has conduct
the option of voiding
QUASI CONTRACT
UNENFORCEABLE
A contract which can not be Imposed by law to
enforced because of legal prevent unjust
defenses enrichment

EXECUTED FORMAL
A fully performed contract Requires a special form for
EXECUTORY creation
A contract not yet fully INFORMAL
performed Requires no special form
• Contracts under Seal 
• Express Contracts 
• Implied Contracts 
• Executed and Executory Contracts 
 Contracts under Seal 

• Traditionally, a contract was an

enforceable legal document only if it
was stamped with a seal. The seal
represented that the parties intended
the agreement to entail legal
consequences.
 Express Contracts 

• The parties state the terms, either

orally or in writing, at the time of its
formation.
 Implied Contracts 

• Contracts that are implied in fact and

contracts implied in law are both
called implied contracts
 Executed and Executory
Contracts
• An executed contract is one in which
nothing remains to be done by either
party.
• An executory contract is one in which
some future act or obligation remains
to be performed according to its
terms.
 Some common types of contracts are
used in the engineering and construction
industry
• Lump Sum Contract
• Unit Price Contract
• Cost Plus Contract
• Incentive Contracts
• Percentage of Construction Fee Contracts
 Lump Sum Contract
• With this kind of contract the
engineer and/or contractor agrees to
do a described and specified project
for a fixed price.
• Also named "Fixed Fee Contract
 Unit Price Contract

• This kind of contract is based on

estimated quantities of items included in
the project and their unit prices.
• The final price of the project is
dependent on the quantities needed to
carry out the work.
 Cost Plus Contract
• A contract agreement wherein the
purchaser agrees to pay the cost of
all labor and materials plus an
amount for contractor overhead and
profit.
 Incentive Contracts

• Compensation is based on the

engineering and/or contracting
performance according an agreed target
- budget, schedule and/or quality.
Percentage of Construction Fee
Contracts
• Common for engineering contracts.
Compensation is based on a
percentage of the construction costs.