Have you ever tried to enter into a simple or complex contract with someone? Let’s say you are selling off your car or borrowing/lending money or setting up a business partnership or even buying a property etc. Whatever it is you may need to enter into some form of contract/agreement.
The aim generally is to impose a duty on parties to carry out their obligations such that breaches of contract are adequately dealt with allowing the other party to take legal action in case of a breach.
A contract is an agreement between two or more competent persons to do an act(s), abstain from doing an act(s) that are legally binding, such that a legal relationship which is enforceable by law is created. A contract could be oral or written and still be legally binding and valid. (Note that by law in most jurisdictions, agreements involving property/real estates, must be in writing). Only a legal, binding and true agreement will be enforceable under the law in several jurisdictions.Contracts are distinct from a promise/an exchange of mutual promise or a mere agreement
For a contract to be valid, enforceable and binding on the parties at law the several valid elements must agree on the subject matter.
A. An offer
B. An acceptance
C. Capacity to contract and Legal capacity of parties to act
D. Legality of the agreement
E. Genuine consent of the parties
F. Consideration
G. Intention to create legal relations and binding relations.
A. OFFER
This is an overt willingness to enter a contract made expressly or impliedly and be contractually bound. It must be definite, certain and unequivocal. An offer remains open for a reasonable time as determined by the nature of the business.
An offer is not an invitation to treat. It is distinct from an advertisement to the whole world and as such is an option.
B. ACCEPTANCE
This is the unequivocal final expression by the person accepting the offer (offeree) to whom the offer is being made to accept the terms of the offer as provided by the person making the offer (offeror). It underscores the bilateral nature of the contract and it must be unconditional. Acceptancemust be in writing, words or conduct.
Acceptance is not a counter offer nor a mere intention to accept.
C. CAPACITY TO CONTRACT/ LEGAL CAPACITY OF PARTIES TO ACT
Parties must have legal capacity to contract.
An insane person or a person of unsound mind cannot enter a valid contract.Again a minor (usually one below 18 years old in most jurisdictions/countries) has no legal capacity to enter into a contract. He/ she must have a guardian representing him or her in such a contract.
D. LEGALITY OF THE AGREEMENT PARTIES
Generally, an illegal contract, one prohibited by law or one contrary to public policy cannot be enforced by law and as such a contract is void ab initio.
E. GENUINE CONSENT OF THE PARTIES
Entering into a contract must involve the elements of free will and proper understanding of what each of the parties are doing. Thus, the consent of each of the parties to a contract must be genuine. Only where the essential element of proper consent has been given is there a contract that is binding upon the parties.
A party can prove that consent was not given by raising issues of mistake, false statements, duress and undue influence or unconscionability.
F. CONSIDERATION (QUID PRO QUID)
This is an exchange between the offeror and the offeree.It consists of some rights, interest, benefit and profit accruing to a particular party. It may be past, present or in the future. Consideration must be in form of cash, services or goods. It must also be a lawful consideration such that it’s not forbidden by law, it’s not fraudulent, does not involve injury, it’s not immoral nor opposed to public policy.
A promise not under seal is enforceable only if it’s made in return for another promise/ act.
Consideration must be distinguished from a generous statement or a one sided promise.
D. INTENTION TO CREATE LEGAL AND BINDING RELATIONS (ANIMUS CONTRAHENDI)
An enforceable contract must show that that the parties involved had an intention to create legal relations and this stems from the fact that parties intend there should be legal consequences.
Intention is determined by whether the agreement is social, domestic or commercial.
Most importantly, there must be some mutual understanding from the parties, and the intention must be to create legal consequences and legal obligations.
Again, all parties must agree on all major issues and be certain about the contract and ensure it is fully understood.
Get on then with those contracts and agreements to secure your interests. Happy drafting!
Oluchi Jacquelyn IRONKWE holds an LL.Bfrom the University of Nigeria and was called to the Nigerian Bar in 2005. She is an Associate of the Institute of Chartered Secretaries and Administrators (ICSA) UK and holds an LL.M in International Commercial Law from Robert Gordon University, Aberdeen, Scotland,UK. She is currently the principal partner of Fontini Juris Solicitors, a corporate and commercial Law firm in Nigeria with a practice that tends to the needs of clients in Africa and across the globe.
Contact us @ fontinijuris@gmail.com or +2347066994545
Very informative.
Very educating . nice one