What is the Legal Definition of a Contract?
Updated: May 13, 2022
In Australia, a contract is a legally binding agreement between two or more people or businesses. For a contract to be legally binding, it must include several ingredients. Those ingredients are:
Offer: there must be an offer from one person to the other
Acceptance: the party receiving the offer has accepted the offer
Consideration: something of value has exchanged between the parties to the contract
Intention: there is evidence that all parties intended the agreement to be legally binding
Certainty: the terms of the contract are clear and certain
Capacity: each party has sufficient capacity to enter into the contract
Formalities: as an additional ingredient, some contracts must also comply with formalities outlined in legislation
Author: Farrah Motley, Legal Principal of Prosper Law, an Australian Commercial Law Firm.