(a) What is a contract? (b) List five elements of a valid contract. (c) Explain four ways by which a contract may be discharged.

(a) Contract

A contract is a legally binding agreement between two or more persons which the law will enforce. It is an agreement that creates rights and obligations that the parties are bound to observe.

(b) Elements of a valid contract

1. Offer and acceptance
2. Consideration
3. Intention to create legal relations
4. Capacity of the parties to contract
5. Genuine consent (free consent) and legality of the object

(c) Ways a contract may be discharged

• By performance: When both parties completely carry out their obligations as agreed, the contract comes to an end.
• By agreement: The parties may mutually agree to end the contract or to replace it with a new one before it is performed.
• By breach: When one party fails to perform his part of the contract, the innocent party is discharged and may sue for damages.
• By frustration (impossibility of performance): When an unforeseen event beyond the control of the parties, such as destruction of the subject matter or a change in the law, makes performance impossible, the contract is discharged.