Elements of Contract Law

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1) What are the four elements of a contract? Discuss each.
A contract is basically an agreement between two or more people which creates an obligation to do, or not do, something. The agreement creates a legal relationship of rights and duties. If the agreement is broken, then the law provides certain remedies.
I INTENTION (to be legally bound)

For an 'agreement' to be a legally enforceable agreement, it must be intended to give rise to legal obligations as distinct from mere social obligations. That is, the parties to the agreement must intend it to affect their legal relations. Contrast the situation where a person is invited to a social function, for instance, and the invitation is withdrawn.

II OFFER

An offer, if accepted, will constitute agreement. An offer is simply a proposal or proposition by one person ('the offeror') to

another person ('the offeree'),

a group of persons, or even

to the "world at large".

An offer is defined as 'a proposal or proposition which, if accepted, gives rise to an agreement'.

An offer can be 'express', or 'implied' - usually from conduct.

III ACCEPTANCE

In deciding whether or not there is agreement, the court will look for the offer, and then examine whether or not it has been accepted. Acceptance is a clear and unambiguous assent to the offer and all of its terms.

Acceptance can be

express (stated or written), or it can be

implied - usually from the conduct of the offeree.

Several rules of acceptance have evolved in the courts over the years. We will now summarise them.

Rule 1
Acceptance must be clear and unequivocal. It is the act of acceptance which converts the offer into a binding contract. However, the acceptance must be unconditional.

Rule 2

Any conditions or requirements imposed by the offeror regarding the method of acceptance must be complied with by the offeree.

Rule 3 (of acceptance)

The third main rule of acceptance is that it must be given with knowledge of the offer and in reliance upon the offer.

The reward cases are relevant in this discussion, notably R v Clarke, where a reward was offered for information leading to the arrest and conviction of the murderers of two police officers in WA. After being arrested and ...