A contract is a legally binding or valid agreement between two parties. The law will consider a contract to be valid if the agreement contains all of the following elements:
1 offer and acceptance;
2 an intention between the parties to create binding relations;
3 consideration to be paid for the promise made;
4 legal capacity of the parties to act;
5 genuine consent of the parties; and
6 legality of the agreement.
An agreement that lacks one or more of the elements listed above is not a valid contract.
Each of these elements is dealt with in more detail in “Elements of a contract”.
Not all contracts need to be in writing. Contracts that are required by law to be in writing include contracts to buy and sell land or to buy a motor car and door-to-door sales contracts. However, it is always useful to have the terms agreed between the parties written down and attached to or kept with any other relevant papers; for example, copies of quotations, brochures, pamphlets, etc. that were supplied at the time the contract was entered into. Receipts for money paid should always be kept. If a dispute arises, these documents will assist in resolving differences between the parties.
A written contract can be drawn up by listing all the terms agreed between the parties and getting each of the parties to sign and date the document at the end.