ELEMENTS OF A VALID CONTRACT- INTRODUCTION

ELEMENTS OF A VALID CONTRACT- INTRODUCTION

FORMATION OF A CONTRACT

Definition

This is a legally binding agreement made between two or more parties or persons.  It has also been defined as a promise or set of promises for the breach of which the law provides a remedy and the performance of which the law recognizes as an obligation.

All contracts are agreements, but all agreements are not contracts.  This is because a contract imposes upon the parties legally binding obligations.

 

Types of Contracts

Contract classified contracts into the following categories:

(i)            Specialty Contracts - which are executed in a special way (i.e. written, signed and sealed).  The Kenya Law of Contract Act, S. 2(1) provides that no contract in writing shall be void or enforceable by reason only that is not under seal.  This provision constitutes a significant statutory departure from the English law relating to specialty contracts.

(ii)          Contracts of record e.g. court orders.

(iii)        Simple contracts - i.e. agreements that are enforceable by the courts.

For the purpose of these notes "the law of contract" means the law relating to "simple contracts".

Formation of Contract

A contract comes into existence when an offer by one party is unequivocally accepted by another, both parties must have the requisite capacity and some consideration must pass between them.  The parties must have intended to create legal relations and the purpose of the agreement must have been legal.  Any requisite legal formalities must have been complied with.

The above passage summarises the so-called elements of a contract.  In order to constitute a contact and agreement must be attended by the basic elements.