Understanding the Law
May 26, 2006

Contract Pt.3

I had broken off our discussion of the contract to bring you a bit on the sub judicate rule and this week we will continue from where we left off.


The agreement is made up basically of an offer and acceptance but to make it a binding contract there must be consideration, that is, there are things of value that are actually exchanged. It is usually something such as land or goods and they are exchanged for money.{{more}}

Consideration need not be adequate but it must be sufficient. In a deed of gift for land consideration is given in the form of love and affection and not money.

The old English case, Carrie v Misa (1875), points out the elements that constitute consideration. These include a right, benefits, detriment and forbearance. We may stress the detriment aspect of consideration as both parties suffer a detriment to gain a benefit. If you rent your house to a friend for $100 per year the consideration is adequate and the contract will be a valid contract.

If something is done some time in the past it cannot the contracted for at present as past consideration is not valid. This is because consideration is usually established at the time of the promise. However, if something is done and it was expected that there would be payment at some later time then perhaps a contract could be inferred. Goods that are smuggled cannot be good consideration. You cannot approach the court for compensation, as the consideration is not valid.

Legal Intent

A contract could have the essential elements of offer, acceptance and consideration but if there is no legal intent then there could be no binding contract and the court will not intervene. It is not unusual for members of a family to make a contract and then go to the court to have it decided as a contract. These are usually suspect and the court will not necessarily see this at a binding contract. The law recognizes that many trivial and absurd domestic arrangements may end up in court and engage the court’s time, hence it is in commercial agreements that legal intent is anticipated.


A person must have the capacity to contract, that is, a person must be 18 years and over to make a contract. Where he is 18 years old but he is drunk he cannot make a binding contract.

In the document that your lawyer drafts up, the contract will have conditions and terms. After you have committed yourself in terms of the written document you cannot go to court to later bring oral evidence to suggest a new condition to the contract. If you have made a contract and the other party has acted on whatever was agreed, you cannot go back on your word. If you have made a contract with your mechanic, his son cannot sue you on the contract because there is no privity of contract. Privity of contract occurs between the signatories to the contract or those who actually make the contract. There are some special situations when a third person will be able to sue as when the personal representative of the deceased acts for the estate. Where a mistake was made or there was misrepresentation, undue influence, or duress the contract may be unenforceable.


If you suffer because of a broken contact the law provides compensation for the damages that you suffer. However, equity offers some even better relief. These will be discussed in a later article article.

• Ada Johnson is a solicitor and barrister-at-law.
E-mail address is: exploringthelaw@yahoo.com