Nature of a contract — common mistakes

In problem questions, always begin by identifying if a valid contract exists before analysing breach or remedies. A good starting point is to state the definition: 'A contract is an agreement giving rise to obligations which are enforced or recognised by law'.

When analysing a scenario, first identify the express terms agreed by the parties. Then, consider whether any terms should be implied by statute (e.g., Sale of Goods Act 1979, Consumer Rights Act 2015) or by the courts to make the contract work.

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.

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].

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.