What is essential elements of a valid contract?

Essential Elements of a Valid Contract

Definition: Essential elements of a valid contract are the basic requirements that must be present for a contract to be legally binding and enforceable in court. These elements include offer, acceptance, consideration, capacity, legality, and mutual consent. Without all these components, a contract cannot be enforced by law.

Quick Summary

A valid contract requires six essential elements to be legally enforceable
Both parties must have legal capacity and freely agree to the terms
There must be something of value exchanged (consideration)
The contract purpose must be legal under Nigerian law
Missing even one element makes the contract void or unenforceable

The Six Essential Elements Explained

1. Offer (Proposal)

An offer is a clear proposal by one party to another, showing willingness to enter into a contract on specific terms. The person making the offer is called the offeror, while the person receiving it is the offeree.

Nigerian Example: Mr. Adekunle tells Mrs. Okafor, “I will sell my Honda Accord to you for ₦1,800,000.” This is a clear offer. He stated what he’s selling (Honda Accord) and the price (₦1,800,000). The offer must be specific enough that Mrs. Okafor understands exactly what she’s accepting.

An offer is different from an invitation to treat. If Mr. Adekunle displays his car at Computer Village with a “For Sale” sign, that’s an invitation for people to make offers, not an offer itself. But if he sends a WhatsApp message to Mrs. Okafor with the specific price, that’s an offer.

Key Points About Offers:

Must be communicated to the offeree (you can’t accept an offer you don’t know about)
Must be certain and definite, not vague
Can be made to one person, a group, or the whole world
Remains open until accepted, rejected, or withdrawn
Dies if the offeror dies before acceptance

2. Acceptance

Acceptance is the offeree’s agreement to all terms of the offer without modifications. When acceptance occurs, a binding agreement forms. Acceptance must be absolute and unconditional – you cannot accept part of an offer and reject other parts.

Nigerian Example: After Mr. Adekunle offers his Honda Accord for ₦1,800,000, Mrs. Okafor responds, “I accept. I will pay ₦1,800,000 for your Honda Accord.” This is valid acceptance. But if she says, “I’ll pay ₦1,500,000 instead,” this is not acceptance – it’s a counter-offer, which becomes a new offer that Mr. Adekunle can accept or reject.

Methods of Acceptance:

Express acceptance: Said or written clearly (“I accept your offer”)
Implied acceptance: Shown through conduct (entering a bus shows you accept to pay the fare)
Acceptance by post: Takes effect when posted, not when received (postal rule)
Silence is NOT acceptance: You cannot say “If I don’t hear from you by Friday, you’ve accepted”

Acceptance must be communicated to the offeror. If Mrs. Okafor decides in her mind to accept but doesn’t tell Mr. Adekunle, no contract exists. The moment Mr. Adekunle receives her acceptance, the contract is formed.

3. Consideration

Consideration is something of value exchanged between parties. It’s the price one party pays for the promise of the other. Nigerian law states that “consideration must be real and have value, but need not be adequate.” This means the law doesn’t care if the exchange is equal, as long as something passes from each side.

Types of Consideration:

Money: Most common – ₦50,000 for a phone
Goods: Exchanging a laptop for a bicycle
Services: A mechanic fixes your car in exchange for you painting his house
Promise: “I’ll pay you ₦200,000 next month if you deliver these goods today”

Nigerian Example: Chinedu agrees to wash Amaka’s car every Saturday for one month. In return, Amaka will braid Chinedu’s sister’s hair for her wedding. Both provide services – this is valid consideration even though no money changes hands.

What is NOT Valid Consideration:

Past consideration: “Because you helped me move house last year, I’ll give you ₦50,000” – the help already happened before the promise
Existing duty: A LASTMA officer cannot make a contract to do his regular traffic duties for extra pay – he’s already obligated by his job
Illegal consideration: Paying someone to forge documents or hide evidence
Uncertain consideration: “I’ll pay you something” is too vague

4. Capacity to Contract

Capacity means legal ability to enter into a contract. Not everyone can make binding contracts under Nigerian law. Both parties must have the mental and legal ability to understand what they’re agreeing to.

Classes of People With Limited or No Capacity:

a) Minors (Persons Under 18):
Generally, contracts with minors are not enforceable against the minor, but the minor can enforce them against adults. Exceptions exist for “necessaries” – items essential for living like food, clothing, shelter, education, and medical care. If a 16-year-old buys school books, that contract is valid because education is a necessary.

Example: Tunde, age 15, buys a Samsung phone worth ₦150,000. This contract is voidable – Tunde can cancel it and get his money back, but the seller cannot force Tunde to pay if he doesn’t want to. However, if Tunde buys textbooks for ₦15,000, this is valid because textbooks are necessaries for a student.

b) Persons of Unsound Mind:
People who cannot understand the nature of the contract due to mental illness, intoxication, or other conditions lack capacity. If you’re drunk when signing a contract and can prove you didn’t understand what you were signing, the contract may be voidable.

c) Corporations:
Companies can only make contracts that their registration documents allow. If Access Bank tries to start a poultry farm business, this exceeds its capacity since banks are registered to provide financial services, not farming.

d) Bankrupts:
People declared bankrupt have limited capacity to contract, especially regarding property and credit.

5. Legality of Object

The purpose and subject matter of the contract must be legal under Nigerian law. Contracts for illegal purposes are void from the beginning and cannot be enforced by any court. The law will not help parties to illegal agreements.

Examples of Illegal Contracts:

Contracts to commit crimes: Hiring someone to forge WAEC results, smuggle drugs, or kidnap someone
Contracts against public policy: Agreeing not to report a crime, contracts that promote corruption
Contracts to defraud: Two people agreeing to deceive a third party
Trading without proper licenses: If NAFDAC prohibits selling certain expired drugs, contracts to sell them are illegal
Restraint of trade: Preventing someone from working in their profession entirely (some limits are allowed, but total bans are illegal)

Nigerian Example: Emeka and Chidi agree that Emeka will pay Chidi ₦500,000 to hack into a bank’s system and transfer money. This contract is completely void because hacking and theft are crimes. If Chidi does the job and Emeka refuses to pay, Chidi cannot sue in court because the court will not enforce an illegal contract. Both parties can also face criminal charges.

Legal Contracts: Renting an apartment, buying goods, hiring employees, selling land with proper documents, providing professional services – these are all legal purposes.

6. Mutual Consent (Consensus Ad Idem)

Both parties must agree to the same thing in the same sense. Their minds must meet – this Latin phrase “consensus ad idem” means “agreement to the same thing.” Consent must be free from mistakes, force, fraud, misrepresentation, or undue influence.

Factors That Destroy Genuine Consent:

a) Mistake:
When both parties are mistaken about a fundamental fact, no real agreement exists. If Kunle agrees to buy Taiwo’s “gold necklace” but both later discover it’s gold-plated brass, not real gold, there was a fundamental mistake about the subject matter.

b) Misrepresentation:
If one party makes a false statement that induces the other to contract, consent is not genuine. If a car dealer tells you a car has never been in an accident when it actually has, you can cancel the contract.

Nigerian Example: Biodun wants to sell his laptop and tells Funke it’s brand new, never used. Funke agrees to pay ₦250,000 based on this. Later, Funke discovers the laptop is 3 years old with repairs. Biodun’s misrepresentation means Funke’s consent was not genuine – she agreed based on false information. She can void the contract and get her money back.

c) Duress:
Consent obtained through force, threats, or intimidation is not genuine. If armed robbers force you to sign a document transferring land ownership, that contract is void because you didn’t consent freely.

d) Undue Influence:
When someone in a position of power over another uses that power to get an unfair agreement. A pastor pressuring a church member to donate their land to the church at far below market value may constitute undue influence.

e) Fraud:
Deliberately deceiving someone to get them to contract. This is more serious than misrepresentation because it involves intentional deception.

How These Elements Work Together

All six elements must be present simultaneously for a valid contract. Think of them as six legs of a table – remove one leg and the table (contract) cannot stand. Let’s see a complete example:

Complete Nigerian Contract Example:

Mrs. Adebayo owns a bakery in Ibadan. She needs a new industrial oven. She contacts Ovens Nigeria Limited.

Offer: Ovens Nigeria Limited sends a written quotation: “We offer to sell you one Model X500 Industrial Oven for ₦850,000, delivered within 10 working days.”
Acceptance: Mrs. Adebayo replies in writing: “I accept your offer. Please deliver the Model X500 Industrial Oven for ₦850,000 as stated.”
Consideration: Mrs. Adebayo will pay ₦850,000 (money). Ovens Nigeria Limited will deliver the oven (goods). Both sides give something of value.
Capacity: Mrs. Adebayo is an adult running a registered business. Ovens Nigeria Limited is a registered company authorized to sell ovens. Both have full capacity.
Legality: Buying and selling ovens is completely legal. No laws prohibit this transaction.
Mutual Consent: Both parties clearly understand they’re agreeing to the sale of a Model X500 oven for ₦850,000. No fraud, force, or misrepresentation occurred. Their minds met on the same terms.

Result: A valid, enforceable contract exists. If either party fails to perform, the other can sue successfully in court.

Comparison: Valid vs Void vs Voidable Contracts

Type	Definition	Essential Elements	Enforceability	Example
Valid Contract	Contains all essential elements and is legally binding	All 6 elements present	Fully enforceable in court by both parties	Adult sells car to another adult for agreed price
Void Contract	Has no legal effect from the beginning; not a contract at all	Missing essential element(s) like legality	Cannot be enforced by anyone; no legal remedy available	Contract to sell illegal drugs; contract with dead person
Voidable Contract	Valid until one party chooses to cancel it	All elements present but consent is flawed (fraud, misrepresentation, undue influence)	Injured party can enforce or cancel; other party must perform unless cancelled	Contract with minor; contract obtained by misrepresentation
Unenforceable Contract	Valid but cannot be proven in court due to technical defects	All elements present but lacks proper evidence or formality	Cannot be enforced due to lack of evidence, not because terms are invalid	Verbal agreement for land sale (law requires writing); no written evidence of contract terms

Common WAEC Exam Mistakes

What WAEC Examiners Report:

1. Listing elements without explanation: Many students write “offer, acceptance, consideration” and stop. WAEC wants you to EXPLAIN what each element means and preferably give an example. Simply listing earns minimal marks.

2. Confusing capacity with consent: Students often mix these up. Capacity is about legal ability to contract (age, mental soundness). Consent is about both parties agreeing freely without fraud or force. They are different elements!

3. Wrong examples for consideration: Writing “love” or “friendship” as consideration fails because these have no legal value. Consideration must be something legally recognized – money, goods, services, or promises to do/not do something.

4. Saying “contract must be in writing”: This is FALSE for most contracts. Only specific contracts (land sales, guarantees) must be written under Nigerian law. Most contracts can be verbal. Writing is for EVIDENCE, not validity in most cases.

5. Not distinguishing between void and voidable: Void contracts never existed legally (like illegal contracts). Voidable contracts are valid but one party can cancel them (like contracts with minors or contracts obtained by fraud). Learn the difference!

6. Using vague language: Writing “both parties must agree” is too general. Be specific: “both parties must give genuine consent to the same terms, free from mistake, fraud, force, misrepresentation, or undue influence.”

7. Forgetting Nigerian context: Use Nigerian examples and institutions. Reference the Nigerian age of majority (18 years), Nigerian currency (Naira), and Nigerian businesses. This shows you understand local application.

Practice Questions

Multiple Choice Questions

1. For a contract to be valid, which of the following is NOT an essential element?
a) Offer and acceptance
b) Consideration
c) Written documentation ✓
d) Capacity to contract

2. A 16-year-old student bought textbooks worth ₦25,000. This contract is:
a) Void because minors cannot contract
b) Valid because textbooks are necessaries ✓
c) Voidable at the seller’s option
d) Unenforceable due to age

3. Which of the following is valid consideration for a contract?
a) Love and affection
b) Promise to pay ₦50,000 next month ✓
c) Past action done before any promise
d) Performing an existing legal duty

4. Adamu was forced at gunpoint to sign a contract selling his land. This contract is:
a) Valid because he signed it
b) Voidable because consent was obtained by duress ✓
c) Void because land sales must be voluntary
d) Unenforceable due to lack of witnesses

5. The Latin phrase “consensus ad idem” refers to:
a) Written agreement
b) Meeting of minds on the same terms ✓
c) Consideration in contracts
d) Capacity to contract

6. A contract to smuggle goods into Nigeria without paying customs duty is:
a) Voidable
b) Valid but unenforceable
c) Void because the purpose is illegal ✓
d) Valid if both parties agree

Essay Questions

1. Explain the six essential elements of a valid contract. (12 marks)

WAEC Examiner’s Tip: Allocate 2 marks per element. For each element: (a) Define it clearly, (b) Explain its importance, (c) Give a brief Nigerian example. Don’t just list – EXPLAIN each element thoroughly.

Sample Answer Structure for One Element:
Offer: An offer is a definite proposal made by one party (offeror) to another (offeree) showing willingness to enter a contract on stated terms. It is essential because without an offer, there is nothing for the other party to accept, and no contract can form. For example, if Bola tells Tunde “I will sell my Samsung phone to you for ₦85,000,” this is a valid offer because it clearly states what is being sold and the price. (2 marks)

2. Distinguish between a void contract and a voidable contract, giving two examples of each. (10 marks)

WAEC Examiner’s Tip: Create clear definitions for each type first (3 marks each), then provide two distinct examples for each type (2 marks each). Make sure your examples are genuine Nigerian scenarios, not copied from textbooks.

3. Musa, aged 17, bought a laptop worth ₦280,000 and a gold chain worth ₦450,000 from the same shop. Later, Musa wants to return both items and get his money back.

(a) Explain whether the contracts are valid or voidable. (6 marks)
(b) State what would happen to each contract if Musa tries to cancel them. (4 marks)

WAEC Examiner’s Tip: Apply the law on minors’ contracts to both items separately. Discuss “necessaries” for the laptop (education-related) and luxury items for the gold chain. The contracts have different outcomes because one is a necessary and one is not.

4. What is consideration in contract law? Explain four things that do NOT constitute valid consideration. (10 marks)

WAEC Examiner’s Tip: Start with a clear definition of consideration (2 marks). Then explain four invalid forms: past consideration, existing duty, illegal consideration, and vague consideration. For each, explain WHY it fails as consideration with examples (2 marks each).

5. Chinwe agreed to sell her car to Femi for ₦1,200,000. Later, Chinwe discovered that Femi had lied about his identity and his ability to pay. Femi is actually a known fraudster.

(a) Identify which essential element of a valid contract is affected. (2 marks)
(b) Explain whether Chinwe can cancel the contract and why. (6 marks)
(c) State two remedies available to Chinwe. (2 marks)

WAEC Examiner’s Tip: This tests consent/fraud. Explain that genuine consent was absent due to Femi’s misrepresentation. Discuss that Chinwe can void the contract because her consent was obtained by fraud. Remedies include rescission (cancelling) and damages (compensation). Apply the law to the facts given.

Memory Aids

Acronym: CALL CO

Remember the six essential elements with CALL CO:

C – Capacity (parties must have legal ability to contract)
A – Acceptance (offeree must agree to offer terms)
L – Legality (purpose must be legal)
L – (No duplicate in acronym – see alternative below)
C – Consideration (something of value must be exchanged)
O – Offer (clear proposal must be made)

Alternative Acronym: O-A-C-C-L-M

Use O-A-C-C-L-M for complete coverage:

O – Offer
A – Acceptance
C – Consideration
C – Capacity
L – Legality
M – Mutual consent (consensus ad idem)

Memory Rhyme:

“Offer made and Accepted clear,
Consideration must appear,
Parties with Capacity here,
Legality makes contract dear,
Mutual consent – minds must agree,
Then valid contract we shall see!”

Quick Check Questions (Before Exam):

What did party A offer?
Did party B accept exactly as offered?
What did each party give/promise? (consideration)
Are both parties adults of sound mind? (capacity)
Is the contract purpose legal? (legality)
Did both parties freely agree to the same thing? (consent)

If you answer YES to all six questions, the contract is valid!