Law 122 Chapter 7: The Nature and Creation of Contracts
• Contract: An agreement that creates rights and obligations that can be enforced
Three steps or elements that are important while creating a contract:
The parties must have an intention to create legal relations.
They must reach a mutual agreement through the process of offer and
They must enter into a bargain by each giving consideration.
• Meeting of the minds: is a shared decision to enter into a legal transaction on a
• An exchange of value: occurs when the parties each give up something.
Comparing Torts and Contracts
Chapter two and three went into detail about the difference between contracts and torts.
Intention to create legal relations
• An intention to create legal relations: Arises if a reasonable person would
believe that the parties intended to create a legally enforceable agreement.
The nature of an offer
• Offer: is an indication of a willingness to enter into a contract on certain terms.
• An Offeror: is a party who offers to enter into a contract.
• An Offeree: is a party who receives an offer to enter into a contract.
An invitation to treat
• An invitation to treat: is an indication of a willingness to receive an offer. In
other words, it is an invitation for other to make offers.
Communication of an Offer
• A statement is not an offer unless it is communicated and received as an offer.
The Life of an offer
• An offer doe not last forever. If it is accepted, it gives way to a contract, And if it
is not accepted, it may cease to exist in a variety of ways.
• Revocation: occurs when the offeror withdraws an offer. Revoction is not
effective unless it is reasonably communicated to the offeree.
A firm offer: occurs when the offeror promises to hold an offer open for
acceptance for a certain period. But as a general rule the offeror can revoke
the offer at any time.
An option: is a contract in which the offeror is paid in exchange for a binding
promise to hold an offer open for acceptance for a specific period.
Tenders: is an offer to under take a project on particular terms. It constitutes an offer to enter into a special contract, called contract A, to
hold a fair tendering process in exchange for the submission of a revocable
It also constitutes an invitation to treat to receive offers to enter onto a
contract, called contract B, for the construction of the library.
• lapse of time: An offeror is entitled t