CONTRACT LAW.
Contract: A contract is a legally binding agreement between two or more parties. It is a promise
or set of promises. When breached, the law provides a remedy, and when performed, the law
recognizes it as an obligation.1 The party that offers the contract is known as the offeror while the
party that accepts the contract is known as the offeree.
Formation of a Contract.
A contract exists when an offer given by one party(offeror) is unequivocally accepted by another
party(offeree). Both parties must have the legal capacity and intention to contract The parties
should enter the contract willingly without any coercion. This kind of agreement gives rise to a
legally binding contract. This means that, when it comes to matters of dispute in the court of law
on grounds of breach then it can be enforced.
The purpose of the contract must be legally accepted for it to be binding. A contract based on
illegal purposes is void and thus unenforceable in a court of law.
Classifications of Contracts.2
Valid Contract: This is a contract that has all elements of a contract as required by law thus legally
binding.
Voidable Contract: This is a contract that is basically valid but lacks the capacity to be enforced
by law.
Void Contract: This is an illegal Contract hence null.
Elements of a Valid Contract.
For a Contract to be termed as valid, it has to have the following elements:
OFFER.
This is an Unequivocal manifestation by one party of its intention to contract with another. The
offer is made by the offeror and the one accepting the offer made is the offeree.
Rules Governing an Offer:
1
Cornell Law School, ‘Contract’ (LII / Legal Information Institute2022)
<https://www.law.cornell.edu/wex/contract>.
2
Cornell Law School, ‘Contract’ (LII / Legal Information Institute2022)
<https://www.law.cornell.edu/wex/contract>.
1|Page
, It must be communicated to the offeree.
It should be unambiguous (communicated in clear language).
It may be: written, oral, or implied from the conduct of the offeror.
It may be addressed to an individual or a group of people.
It may be conditional or unconditional.
The offeror may state the form of communication of acceptance he/she expects from the
offeree.
ACCEPTANCE.
It is the external manifestation of the Offeree’s compliance with the terms of the offer. The
acceptance can be communicated either: orally, written, or implied from the conduct of the
offeree.3 It is at this point that the minds of both parties agree. This is known as Consensus ad
idem.4
Rules Governing Acceptance.
It must be unconditional.
Silence does not connote acceptance.
It must be communicated to the offeror.
It may be oral, written, or implied from the conduct of the offeree.
The offeree must be aware of and intend to accept the offer.
The “Postal Rule” of Acceptance.
This rule was established in the case of Adams v Lindsell (1818) 1B & Ald 6815 where the court
held in favor of Lindsell and stated that; the acceptance became valid when the letter was posted
thus a contract existed between Adams and Lindsell. This laid down the principle that when
the offeree communicates acceptance by post, acceptance is rendered complete the moment the
letter is posted. Whether it reaches its destination or not.
CONSIDERATION.
It is the value element of a contract. It is a promise or performance offered by one party and
accepted by the other party as a value for the other party’s promise. It is a key element in a contract
3
Cornell Law School, ‘Acceptance’ (LII / Legal Information InstituteJune 2022)
<https://www.law.cornell.edu/wex/acceptance>.
4
‘Consensus Ad Idem’ (Sewell & Kettle Lawyers) <https://sklaw.au/dictionary/consensus-ad-idem/>.
5
‘Adams v Lindsell - Case Summary’ (IPSA LOQUITUR) <https://ipsaloquitur.com/contract-law/cases/adams-v-
lindsell/>.
2|Page
Contract: A contract is a legally binding agreement between two or more parties. It is a promise
or set of promises. When breached, the law provides a remedy, and when performed, the law
recognizes it as an obligation.1 The party that offers the contract is known as the offeror while the
party that accepts the contract is known as the offeree.
Formation of a Contract.
A contract exists when an offer given by one party(offeror) is unequivocally accepted by another
party(offeree). Both parties must have the legal capacity and intention to contract The parties
should enter the contract willingly without any coercion. This kind of agreement gives rise to a
legally binding contract. This means that, when it comes to matters of dispute in the court of law
on grounds of breach then it can be enforced.
The purpose of the contract must be legally accepted for it to be binding. A contract based on
illegal purposes is void and thus unenforceable in a court of law.
Classifications of Contracts.2
Valid Contract: This is a contract that has all elements of a contract as required by law thus legally
binding.
Voidable Contract: This is a contract that is basically valid but lacks the capacity to be enforced
by law.
Void Contract: This is an illegal Contract hence null.
Elements of a Valid Contract.
For a Contract to be termed as valid, it has to have the following elements:
OFFER.
This is an Unequivocal manifestation by one party of its intention to contract with another. The
offer is made by the offeror and the one accepting the offer made is the offeree.
Rules Governing an Offer:
1
Cornell Law School, ‘Contract’ (LII / Legal Information Institute2022)
<https://www.law.cornell.edu/wex/contract>.
2
Cornell Law School, ‘Contract’ (LII / Legal Information Institute2022)
<https://www.law.cornell.edu/wex/contract>.
1|Page
, It must be communicated to the offeree.
It should be unambiguous (communicated in clear language).
It may be: written, oral, or implied from the conduct of the offeror.
It may be addressed to an individual or a group of people.
It may be conditional or unconditional.
The offeror may state the form of communication of acceptance he/she expects from the
offeree.
ACCEPTANCE.
It is the external manifestation of the Offeree’s compliance with the terms of the offer. The
acceptance can be communicated either: orally, written, or implied from the conduct of the
offeree.3 It is at this point that the minds of both parties agree. This is known as Consensus ad
idem.4
Rules Governing Acceptance.
It must be unconditional.
Silence does not connote acceptance.
It must be communicated to the offeror.
It may be oral, written, or implied from the conduct of the offeree.
The offeree must be aware of and intend to accept the offer.
The “Postal Rule” of Acceptance.
This rule was established in the case of Adams v Lindsell (1818) 1B & Ald 6815 where the court
held in favor of Lindsell and stated that; the acceptance became valid when the letter was posted
thus a contract existed between Adams and Lindsell. This laid down the principle that when
the offeree communicates acceptance by post, acceptance is rendered complete the moment the
letter is posted. Whether it reaches its destination or not.
CONSIDERATION.
It is the value element of a contract. It is a promise or performance offered by one party and
accepted by the other party as a value for the other party’s promise. It is a key element in a contract
3
Cornell Law School, ‘Acceptance’ (LII / Legal Information InstituteJune 2022)
<https://www.law.cornell.edu/wex/acceptance>.
4
‘Consensus Ad Idem’ (Sewell & Kettle Lawyers) <https://sklaw.au/dictionary/consensus-ad-idem/>.
5
‘Adams v Lindsell - Case Summary’ (IPSA LOQUITUR) <https://ipsaloquitur.com/contract-law/cases/adams-v-
lindsell/>.
2|Page
