Chapter three

Law of Contract
Main Points
Definition of contract law
History of contract law,
Elements of contract Formation:(offer and
acceptance, consideration, contractual intention, capacity,
form and terms).
vitiating elements in contract:(mistake,
misrepresentation, duress and undue influence).
Definition of contract
Contract, in the simplest definition, a
promise enforceable by law. The
promise may be to do something or to
refrain from doing something. The
making of a contract requires the
mutual assent of two or more persons,
one of them ordinarily making an offer
and another accepting.
Definition of contract law
Law of contract: Body of law that governs
oral and written agreements, such as agency
relationships, commercial paper,
employment, and business organizations.
Law of contract The branch of civil
law that deals with interpretation and
enforcement of contracts between two or
more parties.
Definition of contract law
Contract law: is a body of law that governs,
enforces, and interprets agreements related to
an exchange of goods, services, properties, or
money.
According to contract law, an agreement
made between two or more people or business
entities, in which there is a promise to do
something in return for a gain or advantage, is
legally binding. 
Definition of contract law
If one of the parties fails to keep the
promise, the other is entitled to legal
redress.
The law of contracts considers such
questions as whether a contract exists, what
the meaning of it is, whether a contract has
been broken, and what compensation is due
the injured party.
History of contract law
The historical development of contract
law can be under stood in terms of the
conceptual foundations of obligations,
which was traced back to ancient and
classical Roman law.  However the
foundations of the present day law of
contract were laid in the 19th century.
History of contract law
This period in history saw the rapid
expansion of trade and industry
resulting in the increase in the volume
of commercial disputes as a result
people turned to the court of law for
solutions.
Elements of contract formation
A legally binding agreement requires the
four elements of
1. offer,
2. acceptance (offer and acceptance are
collectively referred to as ‘agreement’),
3. certainty,
4. consideration, and
5. the intention to create legal relations.
Elements of contract formation
An offer is a clear proposal to another
party to enter into an agreement on
certain terms. The person who makes
the offer is called the offeror;
the offeree is the party who receives the
offer. For an offer to be valid, it must be
intended seriously and its terms must
be certain.
Elements of contract formation
An offer is not an offer until it has been
communicated to the party for whom it is
intended by mail, messenger, fax, e-mail
etc. The offer lapses if it is not accepted
before the date set out in the offer. In
most cases, an offer can also be withdrawn
or revoked by the offeror before it has
been accepted by the offeree.
Elements of contract formation
Acceptance means that the offeree
agrees to make a contract on the
offeror’s terms. Generally speaking, the
acceptance of an agreement takes effect
once it is communicated to the offeror.
Acceptance is usually communicated in
the same way that the offer was
communicated.
Elements of contract formation
Consideration, is the benefit, such as
money or property, that each party to
the contract receives from the other.
The exchange of value is interpreted
broadly to not only include money, but
property, a promise, doing something,
or even not doing something.
Elements of contract formation
present consideration. Is when
money is exchanged when the contract
is formed.
Future consideration occurs when
one or both of the parties promise to
perform some part of the contract in
the future. 
Elements of contract formation
Past consideration, is an act done
before a contract is made, cannot be
used to create a contract.
Elements of contract formation
Certainty implies that parties to
a contract should always look to
ensure that a contract is certain. If a
contract is incomplete or uncertain,
then it may be found to be
unenforceable.
Elements of contract formation
intention to create legal
relations: means that the parties
must intend to enter into a legally
binding agreement in which the
rights and obligations of the
agreement are enforceable.
Elements of contract formation
Capacity: refers those who do not
have the capacity to create a contract
such as minors i.e. individuals under
the age of 18, or under a mental
disability The law sets out those who do
not have legal capacity to contract.
Elements of contract formation
form and terms A prototype of an
instrument to be employed in a legal
transaction or a judicial proceeding that
includes the primary essential matters,
the appropriate technical phrases or
terms, and any additional material
required to provide it officially accurate,
vitiating elements in contract
vitiating elements in contract
include:
1. mistake,
2. misrepresentation,
3. duress and undue influence.
vitiating elements in contract
Mistake: in contract law is an incorrect
understanding by one or more parties to
a contract.
unilateral mistake: is where one party
is aware of the other party's mistake;
these types of contracts are void as there
is no adjoining link between the offer
and acceptance.
vitiating elements in contract
mutual mistake: is where both parties
are at cross purposes, for example where
one party is offering one thing whereas
the other party is accepting something
else.
common mistake: arises where both
parties have made the same mistake
which affects the basis of the agreement.
vitiating elements in contract
Misrepresentation: is the
communication of inaccurate
information that persuades a recipient
to enter into a contract. Fundamentally,
a contract is the transfer of rights,
property, and consideration between
entities, such as individuals and
businesses.
vitiating elements in contract
Types of Misrepresentations
Fraudulent misrepresentation: is
when an individual intentially uses
false statements of fact to induce
another party to enter into a contract.
Negligent misrepresentation
careless statements of fact that are
untrue.
vitiating elements in contract
In innocent misrepresentation:
made by someone who had reasonable
grounds for believing that his false
statement was true. The sole legal
remedy to innocent misrepresentation
is the award of damages
vitiating elements in contract
Duress: is a means by which a person
or party has been forced or coerced into
the contract.If this coercion can be
shown to be true then the contract
entered into cannot be considered a
valid agreement.
vitiating elements in contract
Undue influence: can arise
where there is a relationship
between the parties which has been
exploited by one party to gain an
unfair advantage.
THANKS
For your attention