INDICATORS OF A VALID CONTRACT
An agreement may contain all the above and still not be a legal contract with binding powers over its parties. Indicators are the legal flavour that makes an agreement enforceable by a court of law. Indicators are the essentials of a valid contract; which must be present at all times for a contract to be legal. The specialty and complexity of a contract may cause a contract to have more than the enlisted.
- Intention To Create A Legal Relation:
We all often enter into agreements with people, with our own different intentions. In some cases we are very serious and will go to court if things go wrong while in some we just hope things go well without an intention to go to court. In the latter, it is a gentleman’s contract; we intend to honour but not drag issues to court or seek any legal damage. Imagine who many times, your parents promised to buy you a toy for swallowing bitter drugs without buying same; nobody meant it to be a legal agreement. Domestic arrangements are never done with an intention to create legal intentions. No legal intention can be perceived in an agreement between a mother and her daughter over washing of dishes.
There can never be a legal contract unless the parties to the contract have an intention to create legal relations (i.e., to be legally bound to the terms and conditions of the contract). In simple, unless they are ready to honour their agreement before the law; having their terms and conditions enforceable by court. Please note that Family members can still make legal contracts where there is an intention to create legal relations. Such must be express and evident in the agreement. It is because of the often lack of intention to create legal relation that people consider family members as good business partners and associates.
- Legal Capacity Of Parties:
For every contract there must be at least two willing persons on opposite sides. The party who offers to do or not to do a thing is known as an “Offeror” while an “Offeree” is the party to whom an offer is made. Example 3; a car dealer who offers to sell a Range Rover Sport (Jeep) is an offeror while his prospective purchaser is the offeree. The car dealer offers while the purchaser considers such offers and may make a counter-offer (i.e. vary the terms of the offer and make his own offer) or accept the offer. Example 4: where a purchaser walks into a car shop and offers to the car dealer a 12 months payment option within which to pay, the car purchaser is the Offeror while the car dealer is the offeree. It is the nature of an agreement that determines an offeror and an offeree. A twist in negotiation changes this status until a deal is made. This position is very important because it determines who is bound by what and also when a contract can be said to have been reached (as I will show below).
Legal capacity is the legal ability and right to contract, agree and be bound by such contracts. The law has stipulated the persons (human and legal persons) that can be involved in an agreement; sane adults including a registered business name, partnership, company and incorporated trustees; associations, foundations, clubs and churches. Some people have no legal capacity to contract because of their age and or illness. The law feels they are too naive or have defective brains, poor cognitive process, that can be exploited by others in reaching agreements. By way of special protection, such persons are exempted from contracts. Minors (persons below 18 years old), infants and lunatics are not allowed in law to make contracts. In exceptional cases and for necessities like transport, food, housing, medical attention and clothing a minor can be contracted with. Apart from necessities, anyone that enters into any other agreement with such persons is doing same at his own peril. The law will not allow you to enforce a contract you entered into with any of the above referred persons. If you must contract with such persons, then you have to do so through their legal guardians and parents. Always demand for the consent of a legal guardian of an infant/minor and that of a Committee in Lunacy of a lunatic in contracts. Example 5; a Primary School Principal who wants a twelve “12” years old pupil to sign an undertaking for good conduct is kidding; such agreement can never be enforced in court. Such a principal ought to seek the guardian/parent of the pupil to sign the undertaking. Example 6; by the provisions of our extant Land law (section 7, Land Use Act, 1978) a person below 21 years old Cannot own, hold, transfer, purchase or alienate land. Any person who enters into a land agreement with such a person is dealing with the wrong person!
- Offer and Acceptance:
There is never an agreement until one offers and another accepts. Where there is an offer without an absolute “acceptance” of such offer there is no contract. While an offeror makes an offer and offeree accepts an offer.
“ACCEPTANCE” is an unconditional and unequivocal admission of the offer made by an offeror. It is an offeror’s communication of his readiness and willingness to be bound by the terms of the offer. Please, note that once you accept an offer as an offeree that is the commencement point of the contract/agreement. Both the Offeror and Offeree are bound from that point henceforth; each must do his part. Example 7; where on a Monday morning a marketer offers to you a Mikano Generator at the cost of N70, 000 and promises to deliver same at your house and you call him on Wednesday to accept his offer, you both are bound from that Wednesday. If on Thursday morning you get to the marketer’s shop to be told the generator is no longer N70, 000 but N100, 000 it will be a breach of contract. You have a case against such a marketer.
Acceptance must be communicated to the “Offeree”. It must be unconditional; just a clear expression of “yes, I want it” or “Yes, am interested”. If it is conditional; “yes, I want it if you will reduce the price” or “Yes, am interested only if you will sale, deliver and install” then it is no longer an acceptance but a COUNTER-OFFER. A Counter-offer passes a contracting baton to the seller to accept or not. Once an offer is accepted its maker (offeror) cannot stop, retrieve, invalidate, cancel, repudiate or withdraw such an offer; rather he/she is bound to the last letter of the offer. Finally, “Offer and a consequential Acceptance” must be present in all valid agreements/contracts.
“If I give you this, what will I receive in return”; that is “CONSIDERATION”. It is what you will forgo to get another thing in a contract. Consideration is an essential element in a contract. Example 8; a “Lex10 Law software” is sold to a lawyer for N3000. The N3000 is the consideration from the lawyer to the software company while the software itself is the company’s consideration to the lawyer for his money. It is a two-way traffic, running between two contracting parties, each party advancing his to the other. It is the “Price-Paid” and the “good or service” purchased.
Consideration is what gives a party the legal right to sue another party who has not performed his part of an agreement. There can never be a contract where there is no consideration. Where there is no consideration there is no contract, no matter how little a consideration is, it counts. Even if it is N2000 for a plot of land in Maitama, Abuja it is sufficient (adequacy or inadequacy of consideration is not a measure). At best what you will have where there is no consideration is a “Promise”. A promise is not enforceable, both the maker and the person to whom it is made are not bound by it; it is a gratuitous offer. But where a “Promise” is made in writing (by deed) it is binding on the maker. “A DEED” is an agreement that is witnessed and says at its end that it is “Signed, Sealed and Delivered”.
Example 9; As a secondary school student, my rector (principal) was promised a whopping sum of One million Naira (N1, 000, 000) by a politician during one of our inter-house competitions just before elections. My rector complained bitterly when the money was not paid; I wondered why he never went to court to have the politician pay him. Well as a child I thought like a child. Although the Politician’s promise was made in the public (before over 700, 000 people); yes it is a mere promise and not a contract. It is a gratuitous offer which he is not bound in law to keep to, honour or redeem. It is gratuitous because there is nothing he will receive in return for it (no consideration). It would have been a different ball game and good news for my rector if he had signed a “Deed of gift” (i.e., a written agreement transferring a gift) with the politician on the said amount. Such a deed like any other agreement can be drawn up by anybody on anything.
A legal contract must have the wilful consent of the parties. Where consent is obtained by fraud, force, duress or any form of misrepresentation, such a contract is not legal and will not be enforceable. Contract must be a wilful agreement of parties. Example 10; if you walk into a shop to buy foreign rice and the shop-keeper brings out a sealed bag of rice written foreign rice and you purchase same, only to find out that it is Abakaliki Rice produced here in Nigeria but packaged in a foreign bag; it is not a contract. That is fraudulent and a reckless misrepresentation of fact which will vitiate the contract. What you signed and agreed does not count where you did such under fear, force, fraud or fake facts.
- Legality of Objects:
There are goods and services that the law has restricted or declared illegal; such can never be the object of a legal contract. No legal contract can be based on illegal goods and services, crimes and immoral acts. Arms, stolen property, human parts, hard drugs, wizardry, prostitution, gambling, assassination, cultism, human trafficking, thuggery and kidnapping are some of the illegal goods and services which can never be contracted on. Any contract made on any illegal subject can never be enforced in law. Who will go to court demanding his unpaid fee for kidnapping and assassination? Who will complain that the talisman, concoction and charm a witch-doctor gave him didn’t work?
The legality of whatever business, property, transaction or deal that you are entering with any one determines if you will ever approach a court to recover your money if the contract fails. An illegal object is a wrong foundation upon which nothing (contract) can be placed on; you can’t keep something on nothing and expect it to stand; (ex nihilo, nihi fit). Example 11, many prospective students pay money to students and lecturers in turn for admission. Where a lecturer accepts N250, 000 to offer admission to an applicant and never fulfilled his part, the applicant can never take a legal action for performance of such contract. Rather he can only explore criminal options, which may send the lecturer to jail at best!
Conclusively, agreement should be made as often as possible between adults of sane minds. It can be made in any form and format but must clearly contain the intentions of parties.