Legally Binding Contract

For a contract to be legally binding all of the following elements must be present. If one or more is absent the contract will be considered invalid or void. The first element of the contract is Offer and Acceptance. For a contract to be considered valid one party (the offer) must make an offer to another party (the offeree). Before an offer is accepted it must be communicated to the offeree. A offer is immediately made into a contract when the offeree accepts the offeror’s tender. An offer can be made by conduct, or orally to one person, or a group of people. If an offer is made to a group of people anyone of that group can enter the contract.
The second element of the contract is ¬Intention. For a contract to be considered valid there must be the intent to create a legal relation. The law allows for a distinction between commercial agreements and social or domestic arrangements. The courts can draw a conclusion as to if there was an intent to create legal intention based on the language used in the contract. The case of Rose and Frank Co. v J.R. Crompton and Bros Ltd (1925) a clause within the contract which said that the agreement was not to be a “formal or legal agreement and shall not be subject to legal jurisdiction in the law courts.” Therefore, it was held that this was not a contract because there was not intent to create legal relation.
The third element of a contract is Capacity. If a contract is made by someone that is e.g. under-age or mentally disable, the contract can become voidable. This is because a party is unable to carry out legal relations by law.
The fourth element of a contract is Consideration. Consideration is the element that found that in the case of Rand v Hughes the contract was violable. This is because the contracts must be written under seal and if they are oral consideration must be proven. Consideration is a benefit/detriment relationship between both parties. There are six rules of consideration. Consideration must be real