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Contract Law

An agreement between a number of parties, binding them to carry out certain actions or forebear from certain actions, and intending to have legal consequences. A contract is formed under the principle of Consensus ad idem, that is, all parties are in agreement as to the particulars of the contract. A contract can involve multiple consenting parties, or it can be unilateral. When a contract has no further effect, it is referred to as discharged.

Classes of Contract

English law recognizes three classes of contract; in decreasing order of formality they are:

An issue of particular interest at the moment is the use of exclusion clauses in contracts to allow one or other party to limit their liabilities for, for example, negligence.


A proper, useful contract is valid and enforceable. For a contract to be legally binding, or "valid", five requirements are often expressed:

  • There must be an Offer by one of the parties.
  • The offer accepted by the other party.
  • The parties must be in agreement on objects of the contract.
  • Unless the contract is "by deed" there must be Consideration. To wit, the offerer must demand something of the offeree. Except in special cases, courts will not enforce contracts that offer something for nothing.
  • The parties must have an intention to enter into a legally binding agreement.


The requirements for a valid contract operate alongside the basic requirements for legality which govern any legal Instrument which are:

  • The parties that enter into the contract must consent fully to do so.
  • They must have the legal capacity to enter into a contract.
  • They must be capable of carrying out their respective parts of the agreement.
  • The actions demanded of the contracting parties must be legal.


If any one of the above conditions is not met the contract will either be void, or voidable. Even if the contract is valid, it may be unenforceable. That is, a court may accept the contract to be in force, but refuse to compel compliance with it. To be enforceable a contract must:

  • be in evidence, that is, the terms must be apparent to the court;
  • be in the right form, for example, some contracts must be in writing;
  • comply with the Limitation act (1980), that is, there is a limit to the time that can elapse between the point at which any party can take action for damages, and the point at which the action is actually taken.