WHAT ARE THE ESSENTIALS OF A CONTRACT?
A contract can be described as "an agreement binding in law between two or more persons in which one or each one promises the others(s) to do nor not to do something."
It is first necessary to analyse the meaning of "agreement". Before parties arrive at an agreement there is often some preliminary discussion as to what each is going to give or do for the other.
Every such discussion resulting in an agreement boils down to a simple statement embodying an offer and a simple answer accepting that offer.
Agreement, then, is generally a matter of offer and acceptance. An offer is a proposal by one party, known as the offer or, of the terms upon which he is prepared to enter into a binding contract. An acceptance is an indication by the other party, known as the offeree, that he is prepared to be bound by the terms proposed. The offer which ultimately results in a contract need not necessarily come from the party who makes the first approach. There may be lengthy negotiations before one party makes an offer which is acceptable to the other. Acceptance of such an offer leads to a binding contract.
But to be turned into an agreement by acceptance, an offer must have been firmly and deliberately made with the intention that it should be so turned into an agreement.
The offer must be certain and definite in its terms.
Before an offer can be turned into a binding agreement it must be clear that it is intended to be the whole offer and it must define all the terms on which agreement is sought.
It often happens that an offer is made as to one or more terms of an intended agreement, leaving others outstanding for further discussion. Pending agreement on such outstanding points, even though they may appear to be of minor importance, neither party may have any rights against the other.
The acceptance of an offer must be defined and unqualified. If it is conditional, such conditional or qualified acceptance is not an acceptance at all, but is in fact a counter offer for the original offeror to accept or reject.
If the original offeror in turn accepts such a qualified acceptance, he is then bound by the terms of the qualification.
An offer is deemed to lapse if acceptance does not take place within a reasonable period. What is reasonable will depend on the type of contract and the peculiar circumstances of each case.
Before acceptance, an offer may be withdrawn unless the offer or has bound himself to keep the offer open for a given period.
After acceptance the agreement is complete and there is no escape for either party.
BACK TO LEGAL & CONTRACTUAL FAQS
