A contract is an exchange of promises between two or more parties to do or refrain from doing an act which is enforceable in a court of law. It is where an unqualified offer meets a qualified acceptance and the parties reach Consensus ad Idem. The parties must have the necessary capacity to contract and the contract must not be either trifling, indeterminate, impossible or illegal.
Contract law is based on the principle expressed in the Latin phrase pacta sunt servanda (pacts must be kept). Breach of contract is recognised by the law and remedies can be provided. Sometimes written contracts are required, such as when buying a house. However, most contracts can be and are made orally, such as purchasing a book or a sandwich. Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations (along with tort, unjust enrichment or restitution).
According to legal scholar Sir John William Salmond, a contract is an agreement creating and defining the obligations between two or more parties.
In common law systems, the five key requirements for the creation of a contract are:
1. offer and acceptance (agreement)
3. an intention to create legal relations
4. legal capacity
In civil law systems, the concept of consideration is not central. In addition, for some contracts formalities must be complied with under what is sometimes called a statute of frauds.
COMMON CONTRACT TERMS
Traders generally use a short form contract identifying key parameters when agreeing a sale and then incorporate standard terms and conditions by reference. At least 70% of those contracts for the international sale of grain and feedstuffs will incorporate Gafta standard forms of contract. This paper will deal only with trades incorporating Gafta contracts and will distinguish between СIF (cost insurance and freight) and FOB (free on board contracts).
The choice of whether to contract on an FOB or СIF basis depends on a number of factors not least of which is whether the trader in question has the capacity or inclination to get involved in organizing their own freight. I will deal later with the basic differences between GIF and FOB contracts but will turn now to look at the short form contracts, which generally traders will enter into. The following are the basic items which are generally identified in the short form contract.
4. Description of goods.
5. Quality of goods
7. Shipment date
10. Other conditions.
1 and 2. Sellers and Buyers
This is usually one of the easiest items to identify however even then in identifying the parties, care must be taken to consider any agency relationships. Is the seller acting on behalf of an undisclosed principle or acting for their own account? It would also be helpful to ensure that the buyers and sellers addresses and contact numbers are properly identified - very useful for communications at a later stage. Their registered office of a party may of course not be their usual place of business.