A contract is a legally binding agreement offering rights and imposing obligations of specific terms between two or more persons (or entities) in which there is a set of promises in re-turn for a benefit (a consideration). The legal bind is only applicable upon the party or ‘privy’ who enter the contract.
For a contract to exist between two parties there must be evidence of the following requirements:
1) An Intention-formal intention from all parties involved to form a legally binding relationship.
2) A consideration- a monetary payment or promise of a benefit in return for the agreement.
3) An Agreement- whereby there is an offer (promise) and acceptance of the shared agreement. …show more content…
Within construction contracts, the promises of a party are referred to in Article 1 and 2 of SBC05 and the requirements are outlined within ‘The Memorandum of Agreement’. For a contract to exist the promise must be enforceable with a consideration. The Courts do not interfere with the commercial terms of a contract as it is the role of the parties to decide the adequacy of the bargain. In Architecture, the consideration is an agreed fee in exchange for the services provided. It is only when the consideration is provided, the parties are drawn into ‘The Privity of a Con-tract’. For the contract to be legally binding there must be an agreement where the offer (precontractual agreement), is accepted with the condition of a consideration, thereafter the parties involved formally enter a legal binding