In fact, words do not even need to be spoken to form a contract, provided each of the 5 elements are present. The form of communication used to make the contract is irrelevant, other than where statutory requirements dictate that to be enforceable, it must satisfy the named prerequisites.Ĭontracts therefore be made - and varied - in telephone calls, Skype calls, Skype IMs, face to face conversations, email, SMS (text) messages, WhatsApp messages, Telegram or Signal messages - you name it. The remedy that makes that happen is rescission. Otherwise, what was a legally binding can reversed, and declared void ab initio at law: ie at law, it was never made. We run through each of the elements below.Īlso, there must be no vitiating factors (such as misrepresentation or illegality) which impair the validity of formation of the contract. Once those elements exist, you have legally binding contract.īut getting there can be tricky, particularly if it’s a verbal contract.
The parties have contractual capacity: The parties are legal entities recognised by law, such as companies, limited liability partnerships and individuals of at least 18 years of age.Intention to be legally bound: Both parties have an intention to be legally bound by the agreement (which is proposed by the offer, and then accepted).
That doesn’t mean it needs to be valuable. promise to provide something else of value.Consideration: Each party provides consideration to the other.Acceptance: The other party accepts the offer.To make a legally binding contract, 5 elements must be satisfied: offer, acceptance, consideration, intention and capacity: The rules apply to oral contracts as well, and those formed by conduct of the parties. Many businesses make the mistake that if there is no written contract, there cannot be a contract. Some contracts must be in writing to be enforceable. The basic principles of formation of contract govern formation all contracts, whether you: A contract is a legally binding agreement between at least two parties.
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