Nature of a contract

Need to know

What you need to know

• A contract is a legally binding agreement that creates enforceable rights and obligations.
• It is distinct from a non-binding social promise or 'gratuitous promise'.
• The three essential ingredients are agreement, consideration, and the intention to create legal relations.
• The law of contract is primarily derived from common law (judicial precedent) and equity.

Explanation

Nature of a contract

1. A contract is a legally binding agreement that creates enforceable rights and obligations.
2. It is distinct from a non-binding social promise or 'gratuitous promise'.
3. The three essential ingredients are agreement, consideration, and the intention to create legal relations.
4. The law of contract is primarily derived from common law (judicial precedent) and equity.