(a) A contract is a legally binding agreement between two or more people which is enforceable in a court of law.
(b) Five elements of a valid contract:
(i) Offer
(ii) Acceptance
(iii) Consideration
(iv) Legally
(v) Intention to create legal relationship.
(vi) Contractual capacity/competence.
(vii) Formality
(viii) Consensus ad idem —Agreement/Genuine assent/Meeting of the minds.
(c) Ways by which a contract may be discharged:
(i) By agreement: If both parties agree to discontinue the contract before any of the parties performed his own side of the contract.
(ii) By performance: A contract ends when each party has completely performed his own part of the contract.
(iii) By frustration: A contract may be discharged by the occurrence of an event which makes it impossible to execute the contract.
(iv) By breach: This occurs when one party fails to perform his own part. The other party may seek for redress in the law court.
(v) By lapse of time: When the period stipulated for the execution of the contract has passed.
(vi) By operation of law: This occurs when a contract is terminated on legal grounds e.g. bankruptcy or court decision that vitiates contractual obligations.