Elements of a valid contract

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Introduction (125 words) We bump into contracts almost every day. Contracts are usually being made orally e.g. boarding a train, purchasing coffee at a shop, purchase cloth at an online store.

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However occasionally written contracts are sometimes required, such as when buying a car or an apartment. A contract were created because that there is an agreement between two parties which is enforceable by law. Offer and acceptance analysis is a common methodology in contract law used to determine whether an agreement exists amongst the two parties. The others are consideration and intention to create legal relationship between parties in forming a contract. The Law of Contract in Malaysia is governed by the Contract Acts 1950. Section 2(h)1 states that an agreement enforceable by law is a contract. Elements of valid contract (375)

Element Explanation
Offer When a party or a person signifies his willingness to enter into a contract with another person. An offer is the starting point and the formation of a contract. When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal – Contract Act 1950.
Acceptance When a person to who an offer has been made to another person and that person makes an acceptance to the offer made. The basic rule on contract acceptance is that the person who made the offer and the person who accepted the offer must correspond with each other.
Consideration It is the price of the promises made. For example Ahmad sell his car for RM80k to Ali. In this case, car is the consideration of Ali and RM80k is the consideration of Ahmad.
Capacity Each contracting party must have the capacity to enter into its contract. Such person must have reached the age of majority according to the Age of Majority Act 1971 and be of sound mind at the time when the contract is made. When the law limits a person for engaging the contract, the contract is voidable for incapacity.
Intention Two parties which enter into a contract must have intimate relationship between them to create legal relations. If there are no intentions between both parties, then there is no intention to create the agreement. Agreements of a social or domestic nature do not contemplate legal relationship; as such they are not contracts.
Free Consent A person is deemed not to freely consent to enter into a contract if he is influenced by coercion,

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