“A contract is a promise or promises mutually exchanged, setting up against the promise or promises, duties of performance which the law will recognize or enforce at the instance or for the benefit of the promise or promises or of third party intended to be benefited” - C.G.weeramantry. All agreements are not legally binding certain elements should be present. There is no legal requirement that a contract should be in writing. It can be verbally or in writing or it could be assumed by the conduct of the parties. However in special circumstances certain statues expressly prescribe certain contracts to be in a particular form.
If we want to create a contract, which is legally binding and enforceable by court of law, such contract includes some elements. They are an offer and unqualified acceptance, valuable consideration, Capacity of parties, intention to create legal relationship, possibility of performance, Genuine consent, Legality, Terms of the contract to be certain. The above factors are common to all legal systems .But the common law doctrine of “consideration” does not apply to civil law systems such as Roman Dutch law. In Sri Lanka different terminologies used in essentials of a contract, Roman Dutch law is the common law of Sri Lanka but statute law may provide different rule.
Before entering legal requirements of a valued contract. The manifestation of agreement is essential. It depends on the parties’ intention. Words or acts can express the intention of a person, which they were uttered or performed. When there is such a manifested meeting of minds the law says “consensus ad idem” between the parties or more shortly that the parties are “ad idem”
Offer and unqualified acceptance, an offer defines as follows “It is a definite promise6 to be bound on certain specific terms. According to this definition we may say that an offer is a conditional promise. If there are no condition attached to a promise it is not an offer one should make the offer known as offerer and the person who give response known as offeree.
In offer there are some pre-requests: it should be a definite promise and it should not be a doubtful one8, the terms should be specific it cannot be vague, A definite offer not restricted to a person or group it can be for the entire world, a reply to an inquiry does not amount to an offer, Declaring an intention to do a thing is not an offer. We should differentiate the offer from invitation to treat. Invitation is treat is not a offer, just exchange of information. The main difference is whereas offer could ripen into a contract upon acceptance, an invitation to treat is not capable of being accepted as is therefore not legally binding.
When we start to differentiate those items the distinction has arisen in the following areas. Normally these constructed as invitation to treat ; Advertisement,tender( when the intention clearly states in unilateral type of contracts consider as offer )Auction of sales(When a word hold “without reserve” would amount to an offer, Display of goods,Sales of land,Carriage of persons, transfer by machine( here the rule is contrast and it consider as offer).Communication of the offeree , in general an offer is effective when and not until , it is communicated to the offeree.
Now we enter to acceptance, it may be define as an unconditional assent, communicated by the offeree to the offerer, to all terms of the offer, made with the intention of accepting. The requipment of an objective perspective is important in cases where a party claims that an offer was not accepted and seeks to take advantage of the performance of the other party. So courts recognized and followed some kind of rules of acceptance.Communication of acceptance, the acceptance must be communicated but exception in unilateral types of contract. An offeree usually not bound, if another person accept such offer has dispenced with the requirement of communication of acceptance –generally in bilateral types of contracts. If the offer specifies a method of acceptance made by a method by that such as “By registered post, and by the method only”. However, acceptance may be inferred from conduct. Correspondence with offer , this rule express that if u are to accept an offer , you must accept an offer exactly, without modifications . However a mere request of information in not amount to counter offer and the revocation must be communicate to the offereor –although not necessary by the offereror , Postal acceptance rule here offereee has posted the acceptance document, the contract will be created but offereo revocate such offer the posted document should received by the offeree .knowledge of the offer, In Australian law , there is a requirement that an acceptance is made in reliance or pursuance of an offer
Termination of offer, unless accepted an offer has no legal effect. Apart from counter offer and express rejection, an offer may terminate in the following ways. Revocation an offer may be revoker at an y time until it is accepted . Open for a period of time will not be binding unless sipported by consideration. Communication of revocation need not be made by the offerer personally , Lapse and Death.
The next element is Consideration, it means something, which is value given by the person in exchange for a promise made to him. It is the element if exchange. A promise is valid in law only in two circumstances. But is it not prevalent in Sri Lanka as a general rule. Consideration is a common law doctrine. In civil law countriesthe simple requirement of “just causa” suffices. There are certain rules with regard to consideration. Consideration needs not to be adequate, the sufficiently is enough,it must not be past, it must be legal,performing the capacity of public duty,waiver of existing rights also should be supported by consideration,performing an existing obligation imposed by statue is not valid consideration. Consideration is generally divided in to three categories such as executory,executed and past. Both executor and executed contracts are valid. But past consideration is not treated as a valid consideration in law. In certain cases past consideration also is a sufficient consideration51
Intention to create legal relationship, both parties must have an intention to make a valid and legally binding agreement. Roman Dutch law recognizes that “the evidence should establish clearly that the intention of the parties was to create a legal obligation”. The contracts are divided in to two; Commercial agreements here court has a strong presumption that the parties legally binding. But when parties express they do not to bind legally hence courts has not any jurisdiction. Domestic agreements it made among friends, family members or relatives. It was presumed do not have an intention to create binding agreement.
Capacity of contract, as in general everyone is capable to entering in to contracts. But sometimes it was restricted behalf of their mental statues insanity, intoxication or by infancy . Terms of contract should be certain. Usually term of contracts classified as conditions and warranties .Genuine consent also help to avoid unnecessary breaks.
These elements are determined by every legal system to their own and specifically use. Sri Lanka also adopts both categories to its law. When both parties understand these ingredients clearly only they can make an effective contract, which was enforceable by court of law. And they can act without fear or favor because any breach of such contract the parties can get remedy through law. Not only contracts governed under the law by statues but also under judicial decisions too. So every contract must include the legal ingredients to develop ever one’s contract view and move effectively in his life.
References01. Anson – Law of contract
02. Law of contract by C.G.Weeramantry
03. Law of contract – Nutshells 04. Law of contract – Open University
04. http://en.wikipedia.org/wiki/Contract accessed on 31st of March 2011. 05.http://www.vakilno1.com/saarclaw/srilanka/lawofcontract
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