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Business Law and Using a Solicitor
2. What is a Contract?
2.1 A contract exists when three conditions are met:
- Both buyer and seller are capable of making and intend to make a contract.
- An offer is made and accepted. A customer may offer to buy - and you can then accept the customer's offer. (Just displaying your product in a brochure or in your shop is not an offer, but an invitation to the customer to make an offer).
- Something of value is exchanged. For example, the seller's product for the buyer's money (or commitment to pay).
2.2 A contract can exist whether there is anything in writing or not.
For example, every time a customer buys something in a shop, there is a contract.
- Some particular kinds of contract (eg property leases over three years) must be in writing.
2.3 Only terms which have been agreed before or at the time of making the contract apply.
- But there are also implied terms (see 3).
2.4 The terms of the contract govern what the seller and buyer are obliged to do.
- Legal action can be taken if one party fails to perform his or her part of the contract.
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