Summary Topic 13: Contracts

Topic 13: Contracts
Unit 1: Definition of a contract and why contracts are necessary

Defined: a contract is an agreement between two or more persons to do or not to do something. A contact can be oral,
written or implied.

2.2 Elements of a contract
 Offer and acceptance - both(all) parties must accept and understand the terms of the contract to mean the same
thing
 Consideration - something of value must be exchanged
 Intention - the parties must intend the contract to be legally binding
 Capacity - both (all) parties must enter into a contract without being mentally insane, drunk, drugged or under
age
 Form - if a particular legal form is required for the contract it must be completed
 Genuine consent - both(all) parties must not sign a contract if forced by threat, fraud or misrepresentation
 Legality of purpose - the contract must be legal
 Possibility of performance - it must be possible for the contract to be fulfilled

2.3 Why are contracts necessary?
 Co-operative relationships help businesses to run smoothly and make more profit. To maintain good relations,
there has to be agreement on various issues. This is often in the form of a contract. The rights and
responsibilities of the two or more parties are clearly laid out in terms of the contract.