Concept of contract of sales

Contract of sales

Contract is an agreement with legal force. It is an agreement which has legal binding nature.

An agreement: It is an offer (proposal) by one party and acceptance by one party. Is where the offeror and offeree relationship unconditionally. An offer made by one person is accepted by one person whom the offer is made.

Essentials of a contract (features)

a. Agreement

Offer and acceptance

• Offer: One party makes a proposal or promise to do something or refrain from doing something. This is called an offer. It can be made orally, in writing, or through actions.
• Acceptance: The other party agrees to the offer without any conditions or alterations. This is known as acceptance. Acceptance must be communicated clearly and unequivocally.
• Mutual Consent: Both parties must agree to the terms of the contract, which creates mutual consent. There must be a "meeting of the minds," meaning both parties must understand and agree on the terms.

b. Intention to create a legal relationship

There must be evidence that the parties involved intended to have a legally binding relationship. Example: An agreement for social interaction cannot be enforced by law, example you can't sue a person who fails to turn up for an appointment to have cup of coffee with you.

c. Consideration

something valuable whether tangible or intangible which is given in exchange for another valuable thing eg: If I give you a watch in exchange for money, therefore watch is consideration for money.

Deed: A contract without consideration

d. Contractual capacity

Parties to a contract must have contractual capacity e.g people with 18 years and above. There are people who are prohibited by the law to enter into a contract and these people are minors, drunkenness impaired, insane. Agreement made by such people are said to be Avoidable (because party lack contractual capacity so withdrawal from such contract is allowed).

Avoidable contracts can also be caused by the induced , misrepresentation and undue influence

e. Form

There are prescribed forms for certain contracts. Eg A contract for sale of land, legal mortgages and leases must be writing.

f. Definite term (contents of contract)

Terms of the contract must be clear and explicit. If they are ambiguous and difficult to understand the courts of law will not enforce them.

Terms of contract are

issues which have to be discussed while negotiating a contract and have to be agreed upon before the contract is made. The terms of contracts specify the rights and duties of the parties to the contract. Terms of contract are express terms or implied terms.

Express terms: Are those issues which have been specifically discussed and agreed upon by both parties in the process of negotiating the contract.

They are subdivided into

1. Conditions
2. Warranties

A condition is a term which is fundamental to the nature of the contract.

Breach of a condition entitles the injured party to the right to cancel the contract, If he so wishes or to go ahead with it and get damages for the loss suffered, eg. If we agree that I am going to buy your goat at 15,000/= you cannot give me a sheep instead because it is the same size as the goat I agreed to buy (this is breach of a condition).

A warranty: Is a minor issue which does not significantly affect the essence of the contract. From the example above. If you deliver to me a goat which fits my requirements but happens to have a broken horn (this is breach of warranty).

A breach of a warranty allows the injured person to receive damages but not the right to repudiate the contract.

Implied terms

Are those issues which may have been overlooked or deliberately ignored at a time of negotiations, although their impact significantly affects the position of the parties to the contract.

They are subdivided into

1. Terms implied by the court
2. Terms implied by statutes

g. Legal objects

any agreements which is contrary to public policy is void (it does not have any legal force). Eg: All types of agreement to commit crime are not valid and if one party fails to perform his part the other party has no recourse.

h. Genuine consent

This requires parties to contract to reach agreement without the influence of the acts such as fraud, Misrepresentation, mistake, undue influence.

Important contents of a contract

A valid contract should possess the following contents;

1. Consideration:

   • This refers to something of value that is exchanged between the parties. It can be in the form of money, goods, services, or a promise to do something or refrain from doing something. Both parties must offer consideration for a contract to be valid.

2. Time and Date:

   • The contract should specify the time and date when it becomes effective. This includes the commencement date of the contract and any deadlines or time frames for completing specific obligations within the agreement.

3. Signature:

   • The signatures of all parties involved are essential to demonstrate their consent and agreement to the terms and conditions. A contract is usually not legally binding without the signatures of the parties.

4. Name and Address of Each Party:

   • The contract must clearly state the full names and addresses of the parties involved. This helps to clearly identify who is bound by the contract and where they can be contacted for any further communications or legal purposes.

5. Terms and Conditions of the Contract:

   • This section outlines the specific duties, obligations, and rights of each party. It includes the scope of the work or service, payment details, delivery terms, warranties, and other crucial clauses that define the contractual relationship between the parties.