“Discuss the legal requirements, essential for the formation of a valid contract which is enforceable before a court of law.”

                                                              “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.

 References
01. 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

The nature and history of equity

This is an extract from Lawbook Company's Nutshell: Equity by Tina Cockburn & Melinda Shirley (Sydney: LBC, 2001). LBC Nutshells are the essential revision tool: they provide a concise outline of the principles for each of the major subject areas within undergraduate law. Written in clear, straightforward language, the authors clearly explain the principles, and highlight key cases and legislative provisions for each subject.

Introduction The body of law called equity is founded upon the principles of fairness and conscience. Its piecemeal development took place over many years as a direct result of the injustices often caused by a strict application of the common law. As a result, equitable principles have also developed in a piecemeal and responsive way. The principles of equity are founded on the conceptof 'unconscionability' that is, where an act or omission is considered to be contrary to good conscience. In those circumstances equity will often step in and grant relief to a party whose trust has been breached or whose disadvantage has been used to the advantage of another. Equitable remedies are both flexible and specific to the circumstances of each case and the granting of equitable relief is always discretionary. An understanding of the history and development of equity is fundamental to an understanding of this area of the law. Medieval period In the medieval period, the doctrine of precedent required the common law to be applied strictly and uniformly.

 Common law proceedings were commenced by the writ which was only available for specified causes of action, so that if a plaintiff could not bring his or her action within those categories, the common law courts could not deal with it. Due to corruption within the court system and the nature of the common law, many decisions of the
common law courts were considered to be harsh and unjust. Dissatisfied litigants began petitioning the King for relief and leniency. As the number of petitions grew, the King delegated that review function to the Lord Chancellor and it was from that function that the Court of Chancery was established. The first chancellors were ecclesiastics with no formal legal training whose decisions were largely shaped by questions of conscience and fairness. The decisions issued by the Court of Chancery in its formative stages were framed according to church law, rather than the common law and as a result this area of the law was not developed upon any clear doctrinal foundations.

 During the 16th century the character of the Court of Chancery changed with the appointment of a lawyer, Sir Thomas Moore as Chancellor. From that point in time all future chancellors were lawyers, reports of proceedings were kept and equitable doctrines began to develop. Conflict between common law and equity The two court systems were soon in conflict and there are many examples of this conflict as the two bodies of law wrestled with the issue of supremacy. The common injunction Dissatisfied litigants from the common law system would seek relief from the Court of Chancery. Equity would then often give relief by way of the common injunction which would either restrain the plaintiff from continuing with his or her common law action or restrain them from enforcing a common law judgment. The penalty for disobeying the common injunction was imprisonment. The response of the common lawyers to the common injunction was to issue writs of habeus corpus which ordered the release of people who had been imprisoned for disobeying Chancery decrees. The use The use was an embryonic form of trust. It was a creation of equity that enabled the division of the legal and beneficial interests in land and took the form: "To A to the use of B". In such a conveyance A (the feoffee) held the legal title and was the only owner recognised by the common law. B (the cestui que use) had no recognised legal interest, but was recognised by equity as having the right to the benefit of the land
which became known as the beneficial interest. The use became an effective tool for the avoidance of feudal taxes and in 1535 the Statute of Uses was passed in an attempt to negate it. That Act executed or abolished the use and deemed the beneficial owner to hold the legal interest. In response, equity lawyers created the use upon a use which took the form: "To A to the use of B to the use of C". The Statute of Uses only executed the first use which left B with the legal title. Equity then recognised the obligation on B to hold the property to the use of C and so the legal and beneficial interests were again successfully separated.

 The Earl of Oxford's case The growing tension between the two bodies of law culminated in the Earl of Oxford's case in 1615. In that case, Coke CJ gave judgment in a common law action which was alleged to have been obtained by fraud. The Lord Chancellor, Lord Ellesmere, then issued a common injunction from the Court of Chancery, preventing proceedings to enforce the common law judgment.

 As the two courts were deadlocked the matter was referred to the Attorney -General, Sir Francis Bacon, who upheld the use of the common injunction and determined that whenever there was conflict between the common law and equity, that equity would prevail. The Judicature Act 1873 During the 17th to 19th centuries the fundamental principles of equity were developed and followed in the court of chancery by way of precedent. However the common law and equity continued to be administered by separate courts and litigants who had commenced their claim in the wrong jurisdiction were forced to start again in the other. The cost and time implications of this duality led to the enactment of the Judicature Act 1873 which fused the administration of the common law and equity. This Act abolished the old court system and replaced it with a new High Court of Justice which was vested with all of the jurisdiction previously exercised by the separate courts. There was one code of procedure for all claims and the ascendancy of equity in any situation of conflict with the common law was specifically preserved in s 25.

 The fusion fallacy Section 25 of the Judicature Act clearly contemplated the continued existence of separate bodies of rules for the common law and equity although their administration had been fused. Nevertheless, a series of cases are argued to be evidence of the proposition that the bodies of law themselves had been combined so that after the Judicature Act , decisions that would have been impossible under the separate systems of law were now possible. This is referred to by academics as the fusion fallacy, and a series of cases is used as examples of the courts implementing this fallacy and combining equitable and common law rights inappropriately:

 Redgrave v Hurd (1881) 20 Ch; Seager v Copydex Ltd [1967] 2 All ER; Walsh v Lonsdalenbsp; (1882) 21 Ch. Many academics argue that the development of the fusion fallacy has harmed equity, however, the modern reality is that the dual administration has led to a convergence of the two bodies of law in relation to a number of doctrines (see: Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (3rd ed, Butt, 1992) para 259. Tina Cockburn BCom LLB (Hons), LLM (QUT) Lecturer in Law Queensland University of Technology Melinda Shirley BA LLB (Hons), LLM (Bond) Lecturer in Law Queensland University of Technology 2001