Questions and answers on contract law

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Question one

In today's business world contracts play an essential role - therefore it is of great importance to know what a contract is, how it is formed and what elements it must contain.

"A contract is a legally binding agreement"(Thomas, 2001 p. 32), usually a commercial agreement based on the law of contract. There are several possibilities of entering into a contract. A small proportion of contracts must be formal written documents (e.g. contracts for the purchase of land), but the vast majority can be made in any of the following ways:

* In Writing: Although any contract may be in writing, only a small number must be in writing.

* Orally: Many contracts are made orally.

* By conduct: A contract may be entered by the following of a course of action, it is not necessary to speak to form a contract.

* It is also possible to form a contract by combining any of the above mentioned three points.

In order to distinguish between an ordinary agreement and a contract, one must consider whether the agreement contains the three essential elements of a contract, which will then