A contract is an agreement between two or more people that creates certain obligations between them. Contracts can be written, verbal, or implied by conduct. Each party to a contract has certain rights and duties. The purpose of a contract is to clearly define the obligations of each party so that there is no misunderstanding about what is expected.
The Contract Law requires that all contracts be made in good faith and with the intention of creating a legally binding agreement. This means that both parties must have the intention to create an enforceable agreement and must not be trying to defraud or mislead the other party. All contracts must also be entered into willingly and without coercion from either party.
There are four main elements that must be present in order for a contract to be legally binding:
1) An offer – one party makes an offer to do something or provides goods or services at a certain price;
2) Acceptance – the other party signals their willingness to accept the terms of the offer;
3) Consideration – each party must receive something of value from the other party; and
4) Mutual assent – both parties must agree to all of the terms of the contract.
If any of these elements is missing, then there is no legally binding contract. For example, if one party makes an offer but the other party never accepts, there is no contract. Similarly, if there is no consideration exchanged, then there is no contract.