Formation of a Contract

What is a contract?
"A promise or a set of promises which the law will enforce" - Sir Frederik Pollock. Contract law is a collective body of legal rules that primarily exist in case law relating to binding agreements made between people in society.

Contract law is of vital importance as if something goes wrong in a contract we want to be able to enforce our legal rights and seek remedy. It's all laissez faire as well so everyone is free to make whatever contract they wish (as long as it's legal).

Classification of Contracts
Contracts may be divided into two broad categories:


 * 1) Simple contracts: these can be anything, written, oral or implied.
 * 2) Speciality Contracts: in some cases, contracts must take specific form (writing). Such as sale of land (Law of Property (Miscellaneous Provisions) Act 1989) and hire purchase or other credit transactions (Consumer Credit Act 1974)

Elements of a Contract

 * 1) Agreement: i.e. there must be a valid offer and acceptance.
 * 2) Consideration: both parties must have provided consideration.
 * 3) Intention to create legal relations: parties must have intended their agreement to have legal consequences.
 * 4) Form: The agreement must be in the required form.
 * 5) Capacity: The parties must be legally capable of entering into a contract.
 * 6) Consent: must be entered into freely.
 * 7) Legality: an agreement cannot be illegal or contrary to public policy.

The reasonable man is used here. If he would look at all of the external evidence and see a contract then it's likely there is one. If one of these elements is missing then a contract may not be enforcable.

Enforceability

 * 1) A Void Contract: where the whole transaction is regarded as a nullity. It means that at no time has there been a contract. Any goods or monies exchanged must be returned. Goods sold onto a third pirty must be recovered by the original owner.
 * 2) A Voidable Contract: operates in every respect as a valid contract unless and until one party takes steps to avoid it. Anything obtained must be returned, insofar as this is possible. The original owner will not be able to reclaim resold goods.
 * 3) An Unenforceable Contract: is a valid contract but it cannot be enforced in the courts if one of the parties refuses to carry out its terms. Items received under the contract cannoth generally be reclaimed.