(a) What is a contract? (b) List five elements of a contract (c) Explain six...
(a) What is a contract?
(b) List five elements of a contract
(c) Explain six conditions that could lead to the termination of a contract.
Explanation
(a) A contract is an agreement between two or more persons which is intended to be enforced by law.
(b) Elements of a contract:
- offer
- acceptance
- consideration
- formality
- legality
- capacity of the parties
- intention to create legal relationship.
(c) Situations/conditions under which a contract is terminated or brought to an end:
(i) By performance: When all the parties to the contract have performed or carried out their own part of the contract.
(ii) By breach: When one of the parties fails to perform his part of the contract.
(iii) By mutual agreement: When the parties voluntarily agree to discontinue the contract especially when negative results are imminent.
(iv) Operation of the law: If the law declares one of the parties bankrupt, the contract is discontinued. When there is an alteration of a written law affecting the contract.
(v) By frustration: If the contract becomes frustrated by an act not foreseen when the contract was entered into e.g. flood disaster, war, insanity, earthquakes.
(vi) Lapse of time: This occurs where there is a term in the contract by which the contract is deemed to have terminated by failure to act in time.
(vii) The contract is discharged by the death or insanity of a party to the contract.
(viii) If the subject of the contract is illegal e.g. prostitution or contract with a minor before the age of eighteen (18) except in the case of a contract of necessity e.g. apprenticeship.