Page 87 - F1 - AB Integrated Workbook STUDENT 2018-19

External analysis – political and legal factors

4.3 Simple contracts

Generally, a contract is a legally enforceable agreement between two or
more parties. Such a contract is known as ‘simple’ if it is not required to
be in any particular form.

Simple contract must have the following features in order to be valid:

CONSIDERATION – in many
AGREEMENT – the parties countries, both parties usually

must have agreed on the terms have to get some value from
of the contract. the contract. Each party must
offer some consideration to

the other.

SIMPLE CONTRACT

INTENTION TO CREATE CAPACITY AND LEGALITY –
LEGAL RELATIONS – both each party to the contract
parties must clearly intend must have the capability to
their relationships to be legally enter to contract. In many
binding. countries, individuals under
the ae of 16 cannot enter a
legally binding contract. In
addition, contracts cannot be

formed for the purposes of an
illegal act.

81