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Contract law

Essential elements of a valid contract

The following elements are needed to form a valid contract:

 Agreement i.e. offer and acceptance

 Consideration

 Intention to create legal relations

 Capacity

– Each party must have the legal power to bind itself contractually. For
example persons under the age of eighteen (minors) and persons of
unsound mind or under the influence of alcohol have limitations on their
power to contract.

 Legality

– The courts will not enforce a contract which is deemed to be illegal.

Form of contract

Most contracts can be oral or in writing. For oral contracts, written
evidence may be useful as proof that it was made and where the
contract details are complex or involve some action in the future.

A contract which does not need to be in writing is known as a SIMPLE
CONTRACT.

Certain types of contracts must be in writing to be valid and enforceable. These are:

 Bills of exchange

 Regulated Consumer Credit Agreements

 Transfers of land (must be evidenced by Deed, known as specialty contracts)

 Guarantees.

The limitation period for a contract made by deed is 12 years. For all other contracts,
the limitation period is 6 years.

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