Introduction Law of Contract

Introduction Law of Contract

"Contract" means the written agreement between the Employer and the Contractor, to which these General Conditions are annexed.

Sources: (UNDP General Conditions of Contract for Civil Works)
A contract is an agreement reached between two or more parties which is legally enforceable when executed in accordance with specific requirements. Contracts should be project specific and reflect the agreement between the parties. Contracts are obviously a key part of every business and it is therefore fundamental that all parties to a contract understand the terms included in a contract and the rights and responsibilities of the parties under that contract.


Every contract should have:

 Offer;
 Acceptance;
 Consideration and
 Intention to create legal relations
Contract
 A valid contract is a legally binding agreement, formed by the mutual consent of two parties.
 A contract may be defined as an agreement which legally binds the parties. The underlying theory is that a contract is the outcome of 'consenting minds'. Parties are judged by what they have said, written or done.
The essentials of a contract
There are three essential elements in any contract.
 Agreement. This is made by offer and acceptance.
 Consideration. There must be a bargain where the obligations of one party are supported by something of value given by the other.
 Intention. The parties must have intended to create legal relations between themselves.
These are the vital elements of a contract.
Vitiating factors

Even if the essential elements can be shown, a contract may not necessarily be valid. The validity of a contract may also be affected by the following factors. These are sometimes referred to as vitiating factors.

Nature of Contract
A contract has been defined as legally binding agreement or, in the words of Sir federickPolock,
“A Promise or set of promises which the law will enforce”, However not all promises or agreements give rises to contracts.

Definition of a contact
A contract is a binding agreement. By one definition a contract is "a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty; Contracts arise out of agreements; hence a contract may be defined as an agreement creating an obligation.

Elements of a Contract

The elements of a contract are:

 an agreement
 between competent parties
 based upon the genuine assent of the parties
 supported by consideration
 made for lawful objective
 In the form required by law, if any. These elements will be considered bellow.
Subject Matter of Contracts
The subject matter of a contract may relate to the performance of personal services, such as contracts of employment to work on an assembly line in a factory, to work as a secretary in an office, or to build a house. The contract may provide for the transfer of ownership of property, such as a house (real property) or an automobile (personal property), from one person to another. A contract may also call for a combination of these things.

Parties to a contract
A person who makes a promise is a PROMISOR, and the person to whom the promise is made is called the PROMISEE. If the promise is binding, it imposes upon the promisor a duty or obligation and the promissory may be called the OBLIGOR. The promise who can claim the benefit of the obligation is also called the OBLIGEE. The parties to a contract are said to stand in private with each other, and the relationship between them is termed private of contract. In written contracts, parties may be referred to by name. More often, however they are given special names that serve better to identify each party. A party to a contract may be an individual, a partnership, a corporation, or a government. A party to a contract may be an agent acting on behalf of other person. There may be one or more persons on each side of the contract. In some cases there are three-sided contracts, as in a case of credit card transaction, which

involves the company issuing the card, the holder of the card, and the business furnishing goods and services in reliance on the credit card.

Type of Contract
Contracts may be classified in term of their form, or in term of their enforceability, or the way they are created. The formal contracts are known as deeds. Formally these contracts had to be in writing and signed, sealed and delivered. Other type of contracts is known as simple contracts. These are contracts may be made orally, in writing or they may be implied from conduct.
Valid, Voidable, Void and Unenforceable Contracts
Avoid contracts not a contract at all. The parties are not bound by it and if they transfer property under it they can recover their goods sometimes even from a third party.
A voidable contract is a contract which one party may avoid. Property transferred before avoidance is usually irrecoverable from a third party.
An unenforceable contract is a valid contract and property transferred under it cannot be recovered even from the other party to the contract. But if either party refuses to perform or fulfill his side of the contract, the other party cannot compel him to do so. A contract is usually unenforceable when the required evidence of its terms, for example, written evidence of a contract relating to land, is not available.

Once a valid contract has been formed, it remains in existence until discharged. The most important means of discharge is breach of contract.

Introduction to Parties in a contract
Construction projects can be best being understood in the context of all industry. Technological complexity ranges from the materials to and trades through to highly complex facilities involving multiple interacting subsystems. Regardless of its technological complexity any reasonably size projects involvers a high level of organizational complexity. This arises because there are many specialized skilled and professions are involved in the process. Therefore there are different descriptions of the construction sector, drawn from different disciplines. This provides a certain amount of confusion which is compounded by the fact that construction involves such a wide range of activity that the industries

external boundaries are also unclear. The term ‘construction’ can include the erection, repair, and demolition of things such as houses. Officers, shops, dams, airports, factories, etc…Many different firms
Carry out specialist work relating to one technology. The industry issues that affect construction projects are difficult to comprehend fully because the relationships between the parties are not always clear and the boundary is unclear.