The law of contract defines a contract as an agreement entered into by two or more parties willingly or voluntarily with the intention of creating a legal obligation. A contract may be in writing or oral agreement. For a contract to be legally binding there must be several key elements present which include an offer, acceptance, a counter offer and if there is no counter offer there is a request for information. An offer is an expression of willingness to be bound by a contract made by the offeror on specific set of terms with the intention that there will be a legally binding contract if the offer is accepted. Acceptance is an expression of unconditional agreement to the terms and conditions made in the offer and can be both in writing or orally and only to the original offer made. A counter offer dismisses the originally made offer and therefore one cannot purport to accept the offer after making a counter offer. A person may ask for more information or clarification about the offer and this does not dismiss the offer as it can still be accepted after clarification is made. It is important that all the parties to a contract have the legal capacity to contract otherwise the contract will not be enforceable by the law. People that do not have the capacity to contract include minors, drunkards, lunatics or people who are not in their right mind.
The law of contract only deals with agreements or contracts that can expressly be dealt with in a court of law. This forms a very important part of business law because almost all business transactions begins with an agreement between two or more parties. A contract creates an obligation between the two or more parties contracting and can be enforced by the law binding them. A contractual agreement must be capable of being fulfilled or performed and should not be based on the impossibilities as this cannot be enforced. All the parties to contractual agreement must have free consent when accepting the terms of a contract. The agreement should not be as a result of coercion or undue influence from one party as the aggrieved party can enforce it according to the laid down rules on the Act.
There is an expression that not all agreements made are contracts but all contracts made are usually agreements. This is due to the aspects and elements that makes a contract legal and binding such as the offer, acceptance, lawful consideration, capacity to contract, free consent and other elements that make a contract legal and binding and which are absent in a regular agreement.