What is a contract?

Essential ingredients

A contract is an agreement between two or more people that is legally binding. Contracts can be verbal or written.


There must be an offer made, which is a proposal to enter into a contract.


The offer must be accepted and must always be communicated to the person who has made the offer.


Consideration must have been given, for example there must be a price paid, or promise made in return or something else that proves that both parties give some value to each other. Gifts are not legally enforceable, since the recipient of a gift gives nothing in return.

Legal relationship

The parties must have intended to create a legal relationship.

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