Essential Elements Of A Contract Essay

A contract is a legally binding agreement. It is not always easy to establish whether the basic requirements of a contract, such as offer and acceptance, the necessity or otherwise of consideration, the capacity of the parties, the reality of their consent, and so on, exist. Dicey and Morris lay down a simple rule, that ‘the formation of a contract is governed by that law which would be the proper law of the contract if the contract was validly concluded’. In Malaysia, the essential elements of a contract are Offer, Acceptance, Intention to create legal relations, and Consideration.

1 Offer

The first element in a valid contract would be offer. An offer or a promise or an agreement needs to be in contract because if there is no offer than there

In a contract, it is very important that a party would make an offer. To make an offer, there should be at least two parties or even more so that it would be legally capable of entering into a contract. If the offer is accepted than it would constitutes to a legally valid contract. This was state in the case of Storer v Manchester City Council [1974]. Where Manchester City Council decided to sell council houses to tenants and told its town clerk to create a simple form to create quick agreements which dispensed with the legal formalities. Mr Storer applied to buy his council house, and on 9 March 1971 the town clerk wrote to him stating 'I understand you wish to buy your council house and I enclose the Agreement for Sale. If you will sign the Agreement and return it to me, I will send

The principle of consideration is to ensure that promises are enforced to the parties that promised to exchange something of value in the viewpoint of the law. Consideration is only present when the parties mean to have an exchange. However, consideration must be sufficient but need not be adequate. It means consideration must be having some values, whether it appropriates in order to meet the return of the agreement. The things that they agree to make an agreement are not just simply in oral promises but also in exchange of some value of the exchange. They would probably not need to have the same value or equal value of the exchange in an agreement but the law will take it as a consideration as adequate if the parties are agreed to the exchange. The conditions of a legally consideration is simply that the parties agree into an exchange and respect to each other, the subjects exchanged or promised in exchange. In the case of Chappell & Co Ltd v Nestle Co Ltd [1959] The defendants, Nestle, contracted with a company manufacturing gramophone records to buy several recordings of music. The plaintiffs, Chappell & Co, held the copyright in these recordings. Nestle offered to sell these records at a discount price to anyone presenting three wrappers from their chocolate bars. The wrappers themselves were worthless and were thrown away by Nestle. The plaintiffs sought an injunction restraining the manufacture and sale