Law of Contract

- Contract, a "promise" or an "agreement" made of a set of promises, the breach of which is recognized by the law and and for which legal remedies can be provided

- Contract law or law of contract is based on the Latin phrase pacta sunt servanda (literally, promises must be kept)

- Breach of a contract is recognised by the law and remedies can be provided

- Almost everyone makes contracts everyday

- Sometimes written contracts are required, e.g., when buying a house

- However the vast majority of contracts can be and are made orally, like buying a law text book, or a coffee at a shop

- Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations

Elements of contracts

All valid contracts must have and usually have the following elements:

- Terms: A set of clauses defining the exact set of promises agreed to

- Mutual agreement: There must be an express or implied agreement

- The essential requirement is that there has to be evidence that the parties had each from an objective perspective engaged in conduct manifesting their assent, and a contract will be formed when the parties have met such a requirement (Notice that the objective manifestation requirement means that one doesn´t actually need to assent, it can also be implied or otherwise understood that way)

- For a contract based on offer and acceptance to be enforced, the terms must be capable of determination in a way that it is clear that the parties' assent was given to the same terms

- The terms, like the manifestation of assent itself, are determined objectively

- Consideration

- There must be consideration given by all the parties, meaning that every party is conferring a benefit on the other party or himself sustaining a recognizable detriment, which is a cost to a party, whatever it may be

- Consideration need not to be adequate, which means courts generally do not look to the value parties place on things contracted for, e.g. agreeing to buy a car for a penny may constitute a binding contract

- Consideration must be legally sufficient, however. Legally sufficient consideration exists when a promise is made, which induces the other party to incur a detriment, which in turn reinforces the initial promise

- Competent, Adult (Sui Juris) Parties

- Both parties must have the capacity to understand the terms of the contract they are entering into, and the consequences of the promises they make

- For example, animals, minor children, and mentally disabled individuals do not have the capacity to form a contract, and any contracts with them will be considered void or voidable