What Is Contract Of Law And Its Elements ?

What is law of contract?

A contract is an agreement between two or more parties to perform a service, provide a product or commit to an act and is enforceable by law.

Blackstone defines a contract as "An agreement upon sufficient consideration to do, or not to do, a particular thing.

According to Pollack “Every agreement and promise enforceable at law is a contract”.

According to Salmond “A contract is an agreement creating and defining obligation between two or more persons by which rights are acquired by one or more to acts or forbearance on the part of others".

According to Sir William Anson “A legally binding agreement between two or more persons by which rights are acquired by one or more to acts or forbearance on the parts of others".

Elements of contact:-

(1) Offer: - The first element of a contract is agreement between parties.  An offer may be made to definite person or persons or to the world at large. When it is made to some specific person or persons it is called a specific offer. When it is made to the world at large it is called a General offer. A specific offer can be accepted only by the person to whom the offer has been made and in the manner, if any specified in the terms of the offer.

Carlill V. Carbolic Smoke Ball Co.  (1983). In this case, the Company advertised that a reward of £ 100 would be given to any person who contracted influenza after having used the smoke-balls of the Company as directed. Mrs. Carlill used the smoke-balls according to the directions of the company. But contracted influenza. It was held, that the offer was a general one, and Mrs. Carlill had accepted it by acting in accordance with the advertisement, and therefore, the company could not get away from its responsibility by saying that they had not meant it seriously. She was entitled to the reward.

(2) Acceptance:- 

Acceptance occurs when an offeree agrees to be mutually bound to the terms of the contract by giving consideration, or something of value like money, to seal the deal. Acceptance is the expression of assent by the person to whom the offer is made.

The following elements must be present in a valid acceptance.

1.     Acceptance must be given only by person to whom the offer is made

2.     Acceptance must be absolute and unqualified

3.     Acceptance must be communicated by the acceptor

4.     Acceptance must be given within a reasonable time and before the offer lapses or is revoked.

 Consideration:-

Considerationis an essential element for te formation of a contract. Itmay consist of a promise to prform a desired act ora promie to refrain from doing an act that one is legally entitled to do. In a bilateral contract—an agreement by which bothparties exchange mutual promiseseach promise is regarded as sufficient consideration for theother. In a unilateralcontrat, an agreement by which one arty makes a promise in exchage for the other's performanc, the performance is consideration for the promise, while the promise is consideation for the performance.

Ram backed into Shyam’s car, damaging it. Ram is liable to pay for the damages, but does not have the money right now. While Shyam could sue Ram for the damages to his car, he enters into an agreement with Ram to give him 90 days to pay the full amount of $1,500, plus an additional $250 for the inconvenience. The agreement states that Shyam will not file a lawsuit before the 90 days is up, but is free to do so after that time. This agreement, or “contract,” provides consideration for both parties:

§  Ram’s benefit: Allen gives up the right to sue for a period of 90 days

§  Shyam’s benefit: Ram will pay for the damages, plus an additional amount of $25.

 (4) Mutuality of obligation: - 

Closely related to the concept of consideration is the mutuality of obligation doctrine. Under this doctrine, both parties must be bound to perform their obligations or the law will treat the agreement as if neither party is bound to perform. When an offeree and offeror exchange promises to perform, one party may not be given the absolute and unlimited right to cancel the contract. Such arrangements attempt to allow one party to perform at her leisure, while ostensibly not relieving the other party of his obligations to perform. Most courts declare these one-side arrangements null for lack of mutuality of obligation. Some courts simply invalidate such contracts for lack of consideration, reasoning that a party who is given absolute power to cancel a contract suffers no legal detriment.

(5) Competency and capacity; and, in certain circumstances: -

Both parties to a contract must have contractual capacity in order for the agreement to be legally binding.  Contractual capacity means that the parties are able to understand that a contract is being formed, and that they understand the basic nature of the contract.  Contractual capacity is sometimes referred to as “competency” or “capacity”.  Contractual competency and capacity has nothing to do with a person’s skill in bargaining or negotiating a contract.  Just because a person does not understand every detail and provision in a contract does not mean that they lack the competency or capacity to form the contract.  It is enough if they understand that they are entering into a contract, and that they understand the general nature of the contract. 

 (6) A written instrument: - 

Legal instrument is a legal term of art that is used for any formally executed written document that can be formally attributed to its author, records and formally expresses a legally enforceable act, process, or contractual duty, obligation, or right, and therefore evidences that act, process, or agreement.

Conclusion:-

There maybe an extensive negotiation between the parties leading to a conclusion of a contract. This maybe in a form of an oral or written communications such as letters, price lists, advertisings as well as formal contract documents.