Sunday, 28 June 2015

How do I know if a contract has been validly formed?

The formation of a contract is an offer and acceptance between two parties.

In order for a contract to be formed, parties must reach a meeting of the minds, where an offer is met with an acceptance. It is presumed that there is an intention to be legally bound, in most commercial agreements.

More importantly, in exchange for the value given by a promissor to a promissee, consideration has to be given. For example, in exchange for A’s service to wash B’s car, B will have to furnish consideration of $50. A contract without any consideration is not valid.

Although most contracts today are done in writing, some contracts may be made orally or by conduct. Whether a verbal agreement validly constitute a contract depends on the terms. However, contracts made orally or by conduct may encounter difficulties in enforcement.

As a general rule, if there has been a meeting of the minds between parties who intend to form a legally binding agreement and furnish consideration, with an agreement reduced to writing, a contract has been formed.

If you would like to seek legal advice or representation, you may wish to consult a contract lawyer in Singapore for more information.