CURRENT LEGAL ARTICLES

A contract is a written or spoken agreement, especially concerning employment, sales, or tenancy, that imposes obligations on the parties and is intended to be enforceable by law. 

Section 1(1) of the Sales of Goods Act (1893) defines “a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. There may be a contract of sale between one part owner and another”. 

For instance, someone that buys a fridge has a contract with the seller.

  

Different elements are necessary to understand whether there is a valid contract. Article 3(1) of the Contractual Obligations (Applicable Law) Act 1991 allows people to choose between the laws of different countries, especially when the contract involves parties from other countries.

  

1. Mutual Assent

Mutual assent is often established when an acceptance follows a, for example, anr. An agreement would manifest mutual consent because it manifests the willingness to enter a bargain. That is why there usually is an offer and acceptance. 

The offer is made by one of the parties intending to enter into a contract on specified terms. Therefore, it is a clear statement addressed to the other party. 

e.g., an advertisement usually is considered to be an invitation to treat (offer), but not as an offer itself.

If the other party accepts that offer, a contract can be formed if there is consideration. For the acceptance to be valid, it must be clear, unambiguous, and unconditional. It can be verbal, in writing or implied from the party’s conduct. 

In the example of someone buying a fridge, the retailer offers a price, and the buyer accepts it, which is a term of the contract. 

  

1. Consideration

Adequate consideration is what makes the promises of the bargain enforceable. Therefore, it is the main element of the contract. On the other hand, a bargained agreement to exchange securities (e.g., payment of the price for the purchase of a chair) or trade a prosecutor a performance (i.e., an employment contract), or even sometimes to exchange performances. Thus, consideration is the “thing”, usually of value (e.g., money), given by each party to the other party of the contract.

Some rules of consideration should be followed:

· Must be sufficient but need not be adequate

· Must be present and not past

· Must be more than what the party has to do

For example, the price (i.e., the money) is the buyer’s promise, and the fridge is the seller’s promise. There is a consideration for both parties. 

1. Intention to Create Legal Relations

Intention to create legal relations is required. Usually, there will be no doubt when a written agreement is signed. But a contract must not be registered and can be done orally. So, for example, if you buy an apple in a store, you agree with the retailer, although there would be no written contract. 

There is the intention to create legal relations when both parties understand the contents of the contract because they have the “intention” to consent to it. The agreement is complete when both parties agree to the significant terms of the contract.

The buyer intends to contract with the seller to buy the fridge at the seller’s price.

 

1. Certainty

Certainty of terms must be reached. The terms of the contract must be clear and concise for the agreement to be binding. If the confidence requirement is not met, the court might decide that the term is unenforceable or that the entire contract is void if the time is fundamental. 

The terms agreed upon are the price and the exchange of the payment for the fridge. The seller knows he will receive the money, and the buyer knows that by giving the money, he will receive the refrigerator.

  

1. Capacity and Legality

Capacity and legality also are essential for the contract to be binding. 

Each party must be legally capable of entering into contracts. Contracts with minors (under 18 years), inebriates and persons with mental incapacity are not legally enforceable. And the purpose of the agreement should be lawful. 

This contract can only be formed if both parties are legally capable, and if it is lawful, it will be enforceable.

The court can provide legal remedies if there is a breach of a binding contract. Usually, the possibilities are to terminate the agreement, damages for infringement, or sometimes a court order will prevent a breach (called an injunction) or require the defaulting party to comply with its obligations under the contract (called a specific performance).

A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract. Meaning when one party breaks the terms of the agreement by failing to perform their promised obligations. It could be anything from a late payment (e.g., rent not paid on time) to a more serious violation, such as when the obligation stated in the contract is not fulfilled.

  

· Minor breach: when an item or service is not received by the due date.

· Material breach: when you receive something different than what was stated in the agreement. 

Generally, a breach falls under one of the two categories:

· Actual/ repudiatory breach: when one party refuses to fully perform the contract’s terms. To be a repudiation, it must be a severe breach, meaning that it is clear that there is an intention to abandon and reject the contract.

· Anticipatory breach: when a party states in advance that they will not deliver on the contract terms. The renunciation (the refusal to perform) must be apparent and absolute.

A warranty gives rise to a claim for damages if there is a breach of the contract between the seller and the buyer. Thus, if the fridge bought were faulty but had a warranty, it would be breached, and the buyer could get damages. 

If not, consumers are protected by the Sale of Goods and Supply of Services Act (1980). Indeed, anything bought from a retailer must be of merchantable quality, fit for its usual purpose, and reasonably durable as described, whether part of the advertising or wrapping, on a label or something the salesperson says.

Although, this legislation only applies to contracts for the “sale” of “goods” (defined by Section 62 of the Sale of Goods Act 1893). Goods “include all personal chattels other than things in action and money and all corporeal moveables except money in Scotland. The term includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.”

If you buy a fridge that turns faulty, if you can prove it is due to the product’s poor quality, you would have a claim. 

The Consumer Protection Act (2007) [CPA] also plays a vital role in the protection of consumers. A consumer is defined (Section 2(1) of the CPA) as a natural person acting for purposes other than the person’s trade, business, or profession. It is someone who purchases goods and services for personal use.

If you have a legal query regarding contract law, please contact Green & Associates at 0214708570.