Contract Law: Fundamental Concepts
Contracts form the backbone of business and commercial relationships, encompassing everyday
activities like buying lunch or taking a bus. They are voluntary agreements that the law upholds,
imposing legal obligations if parties fail to fulfill promises. Distinct from mere agreements, contracts gain
legal force through enforcement by courts.
1. Basic Presumptions:
- Social Agreements: Non-legally binding agreements like Balfour v Balfour, Merritt v Merritt, Coward V
Motor Insurers Bureau, and Albert v Motor Insurers Bureau.
- Legal Sense: Contracts are recognized as legally binding agreements by a specific person.
- Freedom to Contract: Parties are free to establish rights and obligations according to existing laws or
societal rules.
- Equal Bargaining Power: Presumption in commercial agreements that parties intend to be legally
bound.
2. Sources of Contract Law:
- Derived from English law, but evolved with time, incorporating common law, equity principles, and
statute law.
- Statute law addresses contemporary business practices, like sale of goods and consumer legislation.
3. Form of Contracts:
- Contracts can be oral, written, or a combination.
- Statutory exceptions, requiring written form for validity, such as leases over 3 years or guarantees.
4. Types of Contracts:
- Classified based on offer and acceptance:
- Bilateral: Parties exchange promises for specific acts, like most sale contracts.
- Unilateral: Contract formed when the offeree performs a specific act requested by the offeror.
5. Express, Implied, and Quasi Contracts:
- Express: Terms explicitly stated orally or in writing.
Contracts form the backbone of business and commercial relationships, encompassing everyday
activities like buying lunch or taking a bus. They are voluntary agreements that the law upholds,
imposing legal obligations if parties fail to fulfill promises. Distinct from mere agreements, contracts gain
legal force through enforcement by courts.
1. Basic Presumptions:
- Social Agreements: Non-legally binding agreements like Balfour v Balfour, Merritt v Merritt, Coward V
Motor Insurers Bureau, and Albert v Motor Insurers Bureau.
- Legal Sense: Contracts are recognized as legally binding agreements by a specific person.
- Freedom to Contract: Parties are free to establish rights and obligations according to existing laws or
societal rules.
- Equal Bargaining Power: Presumption in commercial agreements that parties intend to be legally
bound.
2. Sources of Contract Law:
- Derived from English law, but evolved with time, incorporating common law, equity principles, and
statute law.
- Statute law addresses contemporary business practices, like sale of goods and consumer legislation.
3. Form of Contracts:
- Contracts can be oral, written, or a combination.
- Statutory exceptions, requiring written form for validity, such as leases over 3 years or guarantees.
4. Types of Contracts:
- Classified based on offer and acceptance:
- Bilateral: Parties exchange promises for specific acts, like most sale contracts.
- Unilateral: Contract formed when the offeree performs a specific act requested by the offeror.
5. Express, Implied, and Quasi Contracts:
- Express: Terms explicitly stated orally or in writing.
