What are the 4 key elements of a valid contract. If the object is unlawful for one or the other of the reasons mentioned above the agreement is void. A lease that has no commencement date is invalid. ILLUSTRATION. 10 Essential Elements of a Valid Contract in Business Law. Proper Offer and Proper Acceptance. A contract is valid if it satisfies all of the required elements. Acceptance. There is absence of ‘free consent’, if the agreement is induced by (i) coercion, (ii) undue influence, (ii) fraud, (iv) mis-representation, or (v) mistake. ‘Consent’ means that the parties must have agreed upon the same thing in the same sense. Consideration Consequently, the landlord maintains ownership of the leased property which can not be transferred to the tenant except by way of alienation (using a Contract of Sale and a Deed of Assignment) or gift (Deed of Gift). This is the most important distinguishing factor between a lease and sale of a real property. The offer is usually the terms that make up the contract. Consent. . Capable parties To be a capable party, the person must have the legal capacity to contract. 5. Consideration is an absolutely necessary element of a contract. Legality and Capacity. As a word of caution, it should be noted that consideration has to be expressly agreed upon by both parties to the contract or it must be expressly implied by the terms of the contract. This means that the rental property is let to the tenant for commercial or business use. 6. Exclusive Possession. Acceptance – manifestation on the part of the offeree, which he/ she unconditionally agree … In order to be competent to contract the parties must be of the age of majority and of sound mind and must not be disqualified from contracting by any law to which they are subject. A potential or accidental benefit or detriment alone would not be construed as valid consideration. upon the issuance of a written notice. the meaning of which is not certain or capable of being made certain are void ” In order to give rise to a valid contract the terms of the agreement must not be vague or uncertain. Consideration. an agreement in restraint of marriage, an agreement in restraint of trade, and an agreement by way of wager have been expressly declared void under Sections 26. 1] Offer must create Legal Relations. Free Consent. For a deal to be binding and legal, the following elements must be present. 3. First, understand the requirements for a valid contract. Hence, the duration of the lease must be certain. Form of Leases. Section 14 of the contract act defined free consent as consent not given under coercion, undue influence, fraud, misrepresentation and mistake. Leases and tenancies (which will be used interchangeably) are the rights a person is given by the landlord to the exclusive use and occupation of the landlord's property for a period of time. a agreement to dine friends house is not an agreement because it does not create any legal relation hence it is not a contract. Fixed-term Leases: This is the type of lease or tenancy that has a specific commencement date and expiration date. When the offer is communicated to the other party, he has the right to accept, reject or amend the offer. As the world population increases, the demand for accommodation rises. Offer and Acceptance2. Form of Leases. A consideration is an essential element in contract formation. For the formation of a valid contract it is also necessary that the parties to an agreement must agree for a lawful object. 1. This article will highlight the salient provisions and elements of a good lease. Essential Characteristics of a Valid Lease, Templates and examples to download in Word and PDF formats. So a social contract which does not create legal relations will not be a valid offer. In addition, a lease or tenancy must have a certain commencement date. It is important to note that under the Personal Income Tax Act 2011, rent collected in advance for a period of 5 years is subject to tax in Nigeria. Periodic Leases: This is a lease that has a specific commencement date and continues periodically until terminated by either of the parties upon the issuance of a written notice. For a contract to be valid, then that contract must have an offer and acceptance. It’s essential that both parties agree to the terms outlined in the contract and acknowledge their agreement with a genuine signature. If two people reach a similar agreement in the same sense, they are said to consent to the promise. In a lease transaction title to the property is not transferred to the tenant. Leases may be made orally or in writing. After reading this article, you can review your Tenancy Agreements to confirm the validity of your lease. It is however considered more expedient to have a written agreement. (i) an arbitration agreement must be in writing as per the Arbitration and Conciliation Act, 1996; (ii) an agreement for-a sale of immovable property must be in writing and registered under the Transfer of Property Act, 1882 before they can be legally enforced. Legal relationship: 3. Tenant is the party that is granted the possession of the landlord's property in exchange for rent payment. 1. This is the type of lease or tenancy that has a specific commencement date and expiration date. Offer. Legally binding contracts must have essential elements in order to be enforced in court. But in certain special cases if lays down that the agreement, to be valid, must be in writing or registered or both. 2. The business contract keeps the work legitimate and protects both parties. e.g. The rent must be ascertainable and clearly specified in a lease agreement for the avoidance of doubt. A contract is a written or oral agreement to do or not to do a certain thing. The offer must lead to a contract that creates legal relations and legal consequences in case of non-performance. Read also: Definition of a Contract. 3. According to section 10, All agreements are contract if they are made by the free consent of the parties, competent to contract, for a lawful consideration, with a lawful object, are not expressly declared by the Act to be void, and where necessary satisfy the requirements of any law as to writing or attestation. Sections 24-30 specify certain types of agreements which have been expressly declared to be void. 1. Consideration. Free consent is another essential element of a valid contract. 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