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What is a
Contract?
Well, a contract denotes a lawfully binding agreement or
exchange of assurances between parties, which is enforceable
by law. Contract law is derived from pacta sunt servanda
(pacts must be kept), a Latin phrase. The law recognizes a
breach of contract and there are solutions for it. Just about
everybody enters into a contract on a daily basis. At times,
written contracts are necessary, such as when one is
purchasing a house. Nonetheless, most of the contracts can be
entered into verbally, such as buying a textbook on law, or
ordering for tea at a cafe. Now, classification of contract
law certainly can be done, as a part of a universal law of
obligations.
When signing a ‘contract’, what precisely do you do? The term
'contract' refers to an assurance or a series of assurances
that one party gives to another that is enforceable by the
Courts. A contract can include several assurances or
conditions to be executed by each party. The 'promissor'
refers to the person giving the assurance and the ‘promissee’
refers to the person capable of enforcing that assurance. In
case the contract comprises of numerous mutual assurances,
then each party will equally be a promissor as well as a
promissee. Now contracts involving interests in land and the
purchase as well as the sale of land typically have a large
number of mutual assurances. Contracts play a vital role in
any business dealing, perhaps, more so in Real Estate. Now for
example, certain contracts are entered into orally whereas
others are formed by the exchange of correspondence. However,
in Real Estate, it is a completely different story, since it
is a legal prerequisite to have contracts put down in black
and white in customarily long legal documents to preclude
doubt, vagueness and to be obligatory.
The major elements in the forging of a contract are offer,
acceptance, consideration, as well as intention:
Offer: It is the promise that one party makes to another, and
should be explicitly defined.
Acceptance: Similar to an offer, this should be given in
explicit terms together with the means of acceptance.
Consideration: This refers to the compensation given. It
should have value, but need not necessarily be in terms of
money.
Intention: It refers to a reason, resolve, or strength of mind
and is essential in contracts.
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