Introduction to Contract Law

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AN INTRODUCTION TO CONTRACT LAW Contract law is that branch of the law which determines the circumstances in which a promise shall be legally binding on the person making it. It consists of an actionable promise or promises i.e. either party may sue on its terms. A contract is a legally binding agreement concluded in writing, by word of mouth, or by conduct (or a combination of these). A ‘bilateral contract’ is one where each party takes on an obligation or makes a promise to the other (mutual obligations). A ‘unilateral contract’ is a contract where one party promises to do something if the other does some act e.g. offer of reward. The basic rules of contract law apply to construction contracts. Moreover, the vast majority of construction work and work ancillary to construction is performed under contract. In Modern Engineering v Gilbert-Ash (1974) Lord Diplock stated that a “building contract is an entire contract for the sale of goods and work and labour for a lump sum price payable by instalments as the goods are as the goods and the work is done”. (Not all building contracts are payable by instalments) FORMATION OF A CONTRACT There are three main elements to every simple contract: * Offer and acceptance * Intention to create legal relations * Consideration OFFERS An offer may be made to a definite person, a definite class of person or to the world at large. An offer may be defined as an intimation by words oral or written, or by conduct, of a willingness to enter into a legally binding agreement which in its terms expressly, or impliedly, indicates that it is to become legally binding on the offeror as soon as it has been accepted by the offeree. Offers must be distinguished from mere intations to treat. It depends on whether the statement is an offer capable of acceptance or merely an invitation to make offers and do

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