CONTRACT LAW

1. What are the essential elements necessary to form a valid contract? Provide examples of each.

A contract needs several essentials so as to be considered valid. These are;

Offer

When a person signifies his willingness to do or to abstain from doing anything with the view of obtaining the assent of the other to such act or abstinence, he is said to make an offer. The offer must be unequivocal and clear. The offer must also be with an intention to create legal relations with the person to whom it’s made. However it ought to be distinguished from an invitation to treat. For example at an auction, the auctioneer invites offers from the potential buyers who then make offers to buy the goods.

Acceptance

For a valid contract to be made, assent by the party to whom the offer was made is essential. It must be absolute, unqualified, within the time set and via the mode the offer was made. It can be described as an agreement by the person to whom an offer is made to contract. Any alterations may result to a counter offer or a cross offer. The auctioneer example will also serve in this instance. When the auctioneer accepts the price and brings down the hammer, it is considered as a sign of acceptance. Acceptance may be oral or written in concurrence with the offer.

Consideration

An act or forbearance of one party, or the promise there of, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable. This in short is an act or omission to which an assurance by the other party to act or omit is acquired. It may be monetary or otherwise. However it need not be sufficient. This means that a good or service may be exchanged for a much lower value. Consideration may be 20 shillings in exchange for a loaf of bread. The bread and the money both form consideration albeit to different parties.

Intention to create legal relations

To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly. For example a sale of land generally requires that both parties are to follow the law relating to Property Law. A dinner offer does not create any legal obligations on either of the parties. A sale of a tonne of maize for an agreed amount however creates obligations enforceable by the court on the party that abdicates their duty.

Capacity

Any person may enter into any kind of contract. However, there are certain classes of individuals to whom specific rules applies, with regard to their capacity to contract.

For example one cannot enter into a contract with a minor unless the contract is for necessities. Similarly a person of unsound mind is not capable of entering into a contract unless the person is capable of understanding the implications of his actions. An example will be entering into contract with a five year old for the purchase of a vehicle. The vehicle is not necessary. But a contract for the purchase of food will be upheld by the court.

2. Under what conditions can contractual duties be modified? When does promissory estoppel apply? Provide an example.

Modification’ of a contract is a change in one or more respects which introduces new elements into the details of the contract or cancels some of them, but leaves the general purpose undisturbed. It generally occurs when the parties agree to change a contractual provision or to include additional obligations, while leaving intact the overall nature of the original agreement. There has to be mutual assent by the parties. This entails the essentials of an offer, acceptance, and consideration.

Promissory estoppel is basically a legal principle that prevents a party to a contract from acting in a certain way because they promised not to act in that way and the other party to the contract relied on that promise and acted upon it. For example a contract for employment whereby one is promised to be hired by a company if they moved to a certain area. When they move, they are fired on the first day or not hired at all. The court will be inclined to enforce the promise as against the maker.

3. What are the differences between a void contract and a voidable contract? Provide examples.

A void contract is one that has a legal defect in its essentials. This is a contract that for example is for an illegal purpose. The court would not for example enforce a contract for the purchase and sale of narcotics.

Voidable contracts are contracts that are lacking in some aspect of the law relating to contracts. A good example is a contract for painting a house. Before the painting is done, the house is destroyed. This will render the contract incapable of being performed based on the presumption that there is no house to be painted. Both parties can rescind the contract in this instance.

4. Which party or parties to a voidable contract have the right to disaffirm the contract?

 The innocent party in the contract has the right to disaffirm the contract. For example, in a contract with a minor for non essentials, the adult in the agreement who discovers that the other did not have capacity to contract may nullify it.

5. Can written agreements be modified orally? Explain why or why not.

The main intention of having a written agreement is to have the full context of the agreement in writing. Oral modifications are not prohibited and a lot matters from the agreement that is in writing. Some agreements explicitly prohibit further oral modifications but if the parties are agreeable then this can be done. However, the terms of an oral modification must be definite and certain, and the party who asserts the oral modification has the burden of proving its existence in court..