Define Contract? Six elements of contract.

A contract is a written or expressed agreement between two parties to provide a product or service. There are essentially six
elements of a contract that make it a legal and binding document. A contract is enforceable when both parties agree to
something, back the promise up with money or something of value, both are in sound mind and intend to carry out their
promise and what they promise to do is within the law. A contract is written and signed by the parties. However, there are
several other types of contracts that are considered enforceable. There are even some that are not considered enforceable
and serve only as a way for a court to determine the obligation on the part of either party. Contract means a promise or
agreement made by two or more persons enforceable by law. An agreement enforceable by law is a contract. At least two
parties are required to enter in a contract that is promisor and promise. In contract an agreement to be valid must be possible
to be performed. The agreement must have certain meaning so that both parties can agree all terms. Six elements of contract
are: 1.An intention to create legal relations: Both parties to an agreement must intend to create a legally enforceable
agreement in order for a valid contract to be formed. In answering the question of whether there was intention to create legal
relations, the courts use an objective test: whether a reasonable person would believe that the parties intended to enter into a
contract. The rationale for this is that a subjective test of what the parties themselves actually thought would be difficult to
apply because the parties could easily lie about their intentions. As well, since the law of contract aims to protect reasonable
expectations, it is appropriate that people be entitled to rely on outward appearances. Therefore, the law presumes that
people entering into agreements intend their promises to be legally binding. 2. Offer: An offer is a tentative promise made by
one party (the offeror), subject to a condition or containing a request to the other party (the offeree).82 It is an indication of
a willingness to enter into a contract on certain terms. 83 Making an offer entail a risk because, as soon as it is accepted, a
binding contract exists. An offer has to be more than a willingness to enter into negotiations. A contract is a legally binding
agreement; neither an offer nor an acceptance should be made without a willingness to accept the legal consequences. 3.
Acceptance: occurs when an offeree agrees to enter into the contract proposed by the offeror.88 The moment an offer is
accepted, a contract is formed and each party is bound to comply with its terms. Acceptance is simply some indication by the
person receiving the offer that the offer is accepted. The acceptance must be clear and absolute and without conditions
attached. The acceptance must be made before the offer has expired. Most offers contain a time limit within which the offer
can be accepted. Once the offer has expired, it can not be accepted unless the person making the offer has renewed.4.
Consideration: It is the price for which the promise (or the act) of another is bought.91 It is an exchange of value that must
move from each party of the contract but not necessarily to the other party. It is enough to promise a benefit to someone; it is
not necessary to provide a benefit to the other party to the contract. Consideration offers a sure legal test for binding
commercial relationships. Without consideration, a contract is simply a gratuitous promise that is not enforceable. There must
be sufficient consideration, which is anything of value in the eyes of the law. However, consideration does not have to be
adequate, meaning that it does not need to have the same value as the consideration given in exchange. The court will not
assess the adequacy of the consideration unless there are special circumstances such as suspicions of fraud or undue influence.
5. Certainty of Terms: The parties must reach agreement on all of the essential terms in a contract. It must be possible to
determine the meaning of the contract with a reasonable degree of certainty. The terms must be stated so that a reasonable
person is capable of readily understanding the terms. In order for a court to enforce the contract, the court must be able to
determine the terms of the contract. It means that the terms must be stated in such a manner that the court can determine
the intent of the parties. The court must be able to determine what was promised. 6. Capacity to Contract: It refers to the
competence to enter into legally binding agreements. Minors and people with diminished mental capacity may lack capacity to
contract. The parties who enter in to contract must have capacity to do so. Capacity here means competency of the parties to
enter in to contract. In Nepal Act is that a minor (i.e., a person below 16 years) or a person of unsound mind, cannot enter into
a contract. But his guardian can do so, in his interest and on his behalf.