Formation of contracts
We all make contracts almost every day. Whenever we buy a coffee, do the grocery shopping, fill the car up with petrol or purchase a ticket for public transport we are entering into a contract. We are often unaware we are contracting (or at least don't turn our minds to that fact) and we almost certainly don't break down our transaction into the various 'components' necessary to give rise to contractual rights and obligations. Nevertheless, these are contracts every bit as much as the detailed written and signed contract for purchasing houses or cars or engaging contractors to do building work.
In most cases we have no need to turn our mind to the specific components of contractual formation; most contracts are made and performed instantly (or almost instantly). However, should something go wrong (eg, one party fails to perform (eg, deliver goods) or goods delivered or services performed are defective in some way), it is important to be able to assess when and whether a valid contract was entered into and the nature of its terms and obligations.
In this section we focus on the first part - whether there is a valid contract in the first place upon which to found a claim. Other parts will consider how we determine the terms (rights/obligations) under the contract, whether contractual obligations may be avoided because of the conduct of the other party (like misleading conduct) or some external factor (some unanticipated event preventing the contract being performed), how we know if there has been a breach and what remedy (or remedies) might flow from that breach.
In order to make a valid contract there are generally five things ('components' or 'elements') that need to be established:
Consideration
(that something be given in exchange for a contractual promise)Compliance with any formalities
(there is no requirement at common law to have a contract in writing or signed, but in some cases legislation requires this).
