"Do We All Agree", The Essence Of Contracts /Agreements
A Contract is an agreement between two parties that creates an obligation to perform (or not perform) particular obligations.
A contract can be made in writing or orally. A contract/agreement must however be legal. There are well established requirements for a valid (legally enforceable) contract. They are as follows;
- OFFER AND ACCEPTANCE
A valid contract/agreement should have an offer that is made by the offeror and such an offer should be accepted by the offeree.
- CONSIDERATION
It means the benefits each party gets or expects from the contract.
- CAPACITY
Minors (below 18 years of age in Botswana) do not have the capacity to contract unless they are emancipated or aided by their guardians. Upon age of majority, the contract may be ratified (made legally enforceable).
Secondly, Insolvents, Prodigals and insane people do not also have the capacity to contract in Botswana.
- CONSENSUS ID IDEM, (‘’The Meeting of the Minds’’)
All parties must have the same understanding of the contract they are entering to.
- ANIMUS CONTRAHENDI, (‘’Intention to Contract/Agree’’)
The parties’ intention to be bound by contract/legal obligations of the agreement.
- PACTA SUNT SERVANDA, (‘’Agreements Must Be Kept’’)
Simply means that the contract is binding upon the parties.
- LEGALITY
The agreement must not be contrary to any laws of the country under which the agreement is made upon.
Kindly note that: The above requirements are necessary to formulate a valid contract agreement (legally enforceable contract). They are normally used in sale contracts, service contracts, employment contracts, lease agreements, partnership agreements, land agreements, licensing agreements, agency agreements, insurance contracts, construction contracts etc.
NB: When assessing the validity of a contract, a subjective test and objective test are undertaken by the courts of law.
POINTS TO CONSIDER:
- If any obligation of the contract is not adhered to by lack of performance, delay, or refusal, that constitutes breach of contract/agreement. The contract becomes enforceable at the discretion of the victim. One may sue for specific performance, damages etc.
- Contracts can either be void or voidable. Void contracts or agreements are those that are not enforceable and actionable whereas voidable contracts or agreements are those that are valid until declared unenforceable.
- The sensitivity of agreements/contracts differs. Some contracts require confidentiality. Hence breach of contract when not adhered to.
- Some agreements such as intellectual property agreements require to ascertain ownership rights as well as licensing at times.
- Most agreements, especially those of ‘’utmost good faith’’ require the parties to honor the duty of disclosure. The reasonable standard is that a party to the contract must not mislead or withhold important information from the other party.
- All contracts and agreements are finalised by the signatures of the parties. It is crucial to note that when a party to a contract automatically agrees to the terms and conditions stated within it by signature, regardless of whether they have read and/or understood them, the contract is binding.
The main aim of entering into agreements is to prevent unfair advantage and conflicts arising between parties. Agreements seek to protect the parties’ interests by serving as a platform by which they can enforce their rights. It is crucial that people seek legal assistance where agreements have not been adhered to. One must not take the law into their own hands.
Most importantly, it is highly recommendable that all sorts of agreements be made by lawyers and put in writing for effectivity and easy ascertainment of the terms and conditions of the agreement in case conflicts or disputes arise.