What is a contract?
A contract is an agreement enforceable at law. Essentially the contract creates the legal obligation between the seller and buyer to complete the transaction on the completion date. In conveyancing, a contract is the document prepared by the Seller’s solicitor and delivered in draft form together with copies of the title to the Buyer’s solicitor for approval. When parties are ready to exchange contracts the signed copies of the contract are actually exchanged between the Seller’s and Buyer’s solicitor by telephone with each lawyer being legally obliged to send their client’s signed copy to the other (with the deposit in the case of the Buyer’s lawyer).
Although this might seem like a simple question, I find that there is a great deal of misunderstanding about what is and is not a contract. People tend to be misled by the title of a document into thinking it is not a contract when, in fact, it is. For example, an “Agreement,” a “memorandum of understanding,” a “settlement,” a “lease,”, etc. may all create legally binding contracts even if the word “contract” never appears in the document. Any agreement may create a contract if it has three things: • an offer to provide a good or service, or a promise to do something or to refrain from doing something, • an acceptance of the offer, and • “consideration,” i.e., the exchange of something valuable (money, work, mutual obligations, etc.) Additionally, the law requires that there be a “meeting of the minds” about the essential terms of the contract. Thus, if both parties are operating under a mutual mistake of fact about the contract, then there is no contract. For example, in a case where
