SS2 Commerce Lesson Note on Features of a Valid Contract

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CONDITIONS /ELEMENTS/FEATURES OF A VALID CONTRACT:

In a common law, a contract must possess these key requirements

• Offer and Acceptance: There must be offer and acceptance, ie. Agreement among the parties to the contract.
• Intention to create legal relations: There must be an agreement to create legal relations.
• Consideration: There must be consideration. This is what you give out to get what you want. Consideration could be money or other valuable materials.
• Capacity to Contract: There must be legal capacity to go into contract both parties must be of contractual age i.e. 21 years and sometimes 18 years. Contract should be entered into with a person that is insane, drunken person, company that acts beyond its powers (ultra vires).
• Formality: This involves the form of which the contract takes as required by the law. For contract to be valid, it must be rendered in the form the law wishes it to be.
• Legality: For a contract to be valid, it must conform with the rules and regulations or law of the land and government policies.
• Consensus: Both parties must agree on a common purpose. i.e. there must be mutual consent/ agreement you go into the contract. If there is no mutual consent, the contract entered into becomes will and void.
• Certainty of terms: The terms of the contract, intentions of both parties must be clear; it should not be vague.

SALES OF GOODS ACT

This is a contract entered into between the seller and the buyer which entails the seller agreeing to transfer his property in goods to the buyer for money consideration known as price.

PROVISION OF THE SALE OF GOODS ACT

1. The seller must have the right or title to sell the goods at the time of sale
2. If the sale is by description, the goods must have to correspond with the description
3. The goods must be merchantable i.e. saleable items
4. The goods must suit the purpose for which they are sold
5. Goods sold by sample must have to correspond with the sample in quality.
6. The seller must deliver the goods and the buyer must accept and pay in accordance with the terms of agreement.

TERMS OF CONTRACT OF SALE

1. The price of the contract must be determines or fixed in a manner agreed.
2. The subject matter: this means the ownership of goods bought. The seller can sue for the price once ownership of goods passes to the buyer
3. Condition: This is the fundamental term of a contract which gives the buyer the right to reject the goods completely if there is a breach.
4. Warranties: This is term that entitles damages to the innocent party if there is a breach, but the contract cannot be said to have come to an end.

CONDITION THAT CONSTITUTES ACCEPTANCE IN THE CONTRACT OF SALE OF GOODS

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