A contract is a promise or set of promises that when broken by one party
A contract is a promise or set of promises that when broken by one party, gives the other party a legal remedy. However, the parties to a contract must intend to create a legally enforceable agreement and to be bound by it. An agreement is considered as void if there is no intention to create legal relations. Legal intention exists where the parties have a clear understanding that they both can take legal actions to impose their rights under their agreement. The basic elements of a contract include intention, offer, acceptance, consideration, legality of subject and capacity to contract. Furthermore, there are two different types of contract, that is, formal contract and simple contract.
A formal contract is a contract executed under seal. It is made in writing which complies strict requirements. A formal contract is usually referred as a deed, signed and sealed with an imprint such as a stamp, for example, a university degree that carries the seal of the university. On the other hand, a simple contract can be written, partly written and partly oral, or totally oral. However, when a court is considering a dispute over an informal contract, it will consider the evidence, that is, the actions of parties and their statements. The court considers the facts and decides on the balance of probabilities which party ‘probably’ has the better case.