Main Elements Constituting a Valid Contract: A contract is a legally binding arrangement. It could be written or spoken. Contracts can be written in formal or casual language, or they can be wholly spoken or verbal. It is a promise made between two or more parties that enables courts to exercise their jurisdiction.
A contract must contain six essential characteristics in order to be valid: offer, acceptance, consideration, desire to create a legal relationship, certainty, and capacity. If the essential elements of the contract are missing, the deal is void.
1. Make an offer
A legitimate contract’s initial element would be the offer. A contract must contain an offer, a promise, or an agreement, because without an offer, there will be no contract. According to the 1950 Contracts Act, the first ingredient of a contract is the offer. It is one of the components necessary to ensure the contract’s legal validity or acceptability. It is critical for a party to make an offer in a contract. There is a distinction between an advertisement and an option in terms of offer. To make an offer, there must be at least two parties, preferably more, in order for it to be legally enforceable. If the offer is accepted, a legally binding contract is formed. When an offer is made, the other party or individual is aware of what is being offered and what the person or party making the offer anticipates receiving in return. It’s the same for anybody who goes on vacation or stays in a hotel. For instance, a family has made arrangements with a tour operator to spend a few days in Hong Kong. The tour agency would enter into a contract with the family by distributing forms that would need to be completed. The family member who fills out the paperwork must be familiar with the tour agency’s rules and regulations. Once it is full, a contract between the family and the tour agency is formed.
2. Acknowledgement
Following the inclusion of an offer in the contract, acceptance should occur. A contract cannot be formed unless the other party or individual accepts it. When the other party understands the offer, they will accept it provided they understand the contract’s norms and conditions. There will be no contract if the parties continue to negotiate or discuss without accepting the offer. The individual or party may accept an offer provided in writing or verbally. For instance, a traveler writes to hotel K to inquire about the cost and availability of lodging for the week beginning April 15, 2011. The personnel at hotel K responds to the enquiry by stating that the available lodging for that week will cost RM 600 and that if the tourist responds within a week with a deposit of RM 100, the room will be assigned to him. If the tourist accepts the offer, a contract between the tourist and hotel K is formed.
3. Deliberation
Consideration is also a critical component of the contract. Consideration in a contract implies that the other party will provide something in exchange. It would be regarded as a trade between the promisee and the promissor. A contract must include consideration in order for it to be legally valid. For instance, a customer at a fast food establishment such as McDonald’s purchases an RM7.95 set lunch. By ordering the set meal, the consumer agrees to pay the set lunch price of RM7.95.
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However, consideration makes no threat to on-line vacation contracts. Holiday services given by on-line holiday providers, as well as consideration in the form of payment money or even payment made by holidaymakers, would finally satisfy the conditions for consideration of a contract.
4. Intent to Establish Legal Relationships
This element is required in all contracts. It is a prerequisite of the purpose to establish legal relations, notwithstanding the fact that the Contracts Act 1950 makes no reference to the intention to establish legal relations as a requirement of a valid contract. This aspect would include an agreement that is not a contract in the traditional sense unless the parties agree that it should be legally enforceable. If a contract is not intended to create legal relations, it may be sued. For instance, when a contract or agreement is reached between a parent and his or her children. If a parent dies, the children inherit any property or possessions the parent leaves behind.
5. Confidence
Another critical component of a contract is certainty. The terms and conditions of a contract should be expressed plainly and understood by the contract’s parties. If an agreement is not certain, it loses its validity. For instance, if the guest wishes to stay in a hotel, the guest must indicate the number of days he or she would be staying, the type of room, as well as the date and duration of the stay.
6. Abilities
Capacity in a contract means that the parties must have the legal capacity to enter into it. A major’s age is specified as 18 years old. Minors, defined as individuals under the age of eighteen, lack the capacity to engage into contracts. As a result, mad individuals or those with impaired mental capacity are likewise prohibited from entering into binding contracts. For instance, a person under the age of sixteen cannot remain at a hotel.
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The hotel staff would not allow a sixteen-year-old to remain at the hotel since he or she is not eighteen years old or older. To stay at the hotel, the individual must be accompanied by a guardian who is at least eighteen years old or a parent.
Concluding the parts of an enforceable contract
As a result, it is critical to include the essential parts in a contract. A contract is only legally valid if it has all of the essential parts. Individuals should exercise caution while drafting a contract to ensure that the parties agree on the contract’s terms.
