9084 · 3.1.1
Nature of a contract — FAQ
Frequently asked questions for 9084 Nature of a contract. Direct answers first, then deeper explanation — then practise with marking.
Is a verbal agreement a valid contract?
Yes, a verbal (or oral) agreement can be a perfectly valid and binding contract, provided it has all the essential elements: agreement, consideration, and intention to create legal relations. However, its terms can be difficult to prove in court. Some specific types of contracts, such as those for the sale of land, are required by law to be in writing.
If I promise to give my friend a gift, is that a contract?
No, this is generally not a contract. It is a 'gratuitous promise'. For a promise to be legally binding, the other party must provide 'consideration' – something of value in return. A one-sided promise lacks this element of bargain. Furthermore, in social arrangements like this, the law presumes there is no intention to create legal relations, as per Balfour v Balfour [1919].
Does signing a document automatically mean a contract is formed?
Signing a document is very strong evidence of an agreement, but it is not conclusive. For a contract to be valid, the underlying agreement must be genuine. If a signature was obtained through misrepresentation, duress, or undue influence, or if the document lacks essential elements like consideration, a court may find that no valid contract was formed despite the signature.