Chapter NMWM04040
Published date | 16 April 2016 |
Record Number | NMWM04040 |
Court | HM Revenue & Customs |
A contract consists of an offer by one party and an acceptance by the other. Both the offer and the acceptance may be written, oral or implied or a combination of these.
For a contract to be valid and legally binding (enforceable) there must be:
- Agreement; both parties must agree on their respective obligations. Agreement is reached by the process of an offer by one party being accepted by the other.
- Intention to create legal relations; both parties must intend to enter into a legally enforceable relationship; that is they intend for their respective contractual obligations to be legally enforceable. An intention to create legal relations can usually be inferred from the presence of consideration. However, there may be no such intention in certain family, domestic or social arrangements.
- Consideration; a contract results from a bargain. Consideration is what each side promises to give up or do for the other. Consideration has to be something of worth such as a payment of money, an item of value, a benefit in kind or a service. In English law, the consideration must be sufficient to reasonably and fairly induce the parties to enter into a contract. For example...
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