CAT / FIA FFM Syllabus F. Credit Management - Key elements of a contract - Notes ^{1 / 5}

A valid contract is a legally binding agreement, formed by the mutual consent of two parties.

The 3 essentials of a contract

1. There must be an agreement usually made by offer and acceptance.

2. There must be a bargain by which the obligations assumed by one party are supported by consideration (value) given by the other.

3. The parties must have an intention to create legal relations between themselves.

The following contracts must be in writing and signed by at least one of the parties.

• A transfer of shares in a limited company

• The sale of a land

• Bills of exchange and cheques

• Consumer credit contracts

Some definitions...

1. Offer

   An offer is a definite promise to be bound on specific terms.

2. Acceptance

   must be an unqualified agreement to all the terms of the offer.

3. Breach of contract

   A party is said to be in breach of contract where, without lawful excuse, they do not perform their contractual obligations precisely.