Contract Law

What Makes a Contract Valid?

Intention to be Legally Bound

The parties must mean what they are doing when entering a contract. It one thing to intend to cooperate when and how it seems suitable, but a very different thing to intend to be legally bound  to the fulfillment of an agreement. For this reason courts are very reluctant to find contracts in existence between family members. The more casual, optional or unpredictable the relationship between the parties, the less likely there is a real contract. A signed document setting out terms and damages for breach helps, but even this is not all-sufficient in proving that a contract came into being. This is not to say that the written terms and signatures are disregarded, but where there is good evidence contrary to an intention to be legally bound, then evidence in favour of it is needed.

 

If someone is severely affected by alcohol, drugs, age, mental illness, or intellectual disability, they are considered incapable of forming an intention to be legally bound. Any contract with them is void. In these instances a holder of power of attorney, a parent or guardian, a case worker, or a trusted sibling, can be of assistance.