The law of contract affects every single transaction between buyers and sellers. It is a legally binding relationship between two or more people that is enforceable by law.
- Offer: An offer is a proposal to give or do something and, when accepted, there is said to be an agreement. It must be clear and may be implied by conduct e.g. taking goods to the checkout.
- Acceptance: This is a positive unqualified assent to all terms of the offer e.g. a house buyer makes an offer of price for a house and seller is happy to accept.
- Consideration: This refers to whatever is exchanged between the parties.
-It must be real
-It need not be adequate
-It must be legal
e.g. The staff at the Beckham wedding signed a contract of silence in which the consideration was agreed at a €1. This was never paid which means a valid contract did not exist.
- Intention to contract: The Person must want to create legal relations. Therefore the parties signing a contract must know that they are entering a legal agreement that cannot be broken
- Capacity to contract: This is the power of a natural person to enter into a contract.
The following parties do not have the capacity to enter a contract.
- Minors- people under 18 except for necessities e.g. food
- Persons under the influence of alcohol or illegal drugs
- Persons of unsound mind.
- Consent to contract: A person must enter into a contract of their own free will. There should be no use of force or lies. e.g. a groom only married his pregnant wife after he was threatened by her father. One month later the marriage contract was cancelled.
- Legality of form: This refers to the manner in which the contract is made. It can be oral (simple contract) or written. E.g. when buying a house a contract must be written.
- Legality of purpose: This means that legally binding contracts can only be for legal transactions. E.g a judge will not award compensation to a bank robber whose getaway driver did not show up as agreed!!
Invitation to treat is not the same as offer- An invitation to treat invites a person to make an offer to buy something. E.g. a price tag on a pair of jeans is an invitation to buy the jeans. If the customer decides to buy the jeans, this is an offer. If the shopkeeper accepts the offer, this is acceptance, therefore a contract has been made.