At the heart of any business transaction lies the question on the validity of the transaction and

the contract itself. The essential elements of a contract are a list of factors and points
surrounding the formation and performance of a contract that determine whether a contract is
valid, enforceable or recognise in the eyes of the law. This looks at the existence of an
agreement, the intention to contract, legal capacity of the parties, the legality of the contents
and terms of the contract, possibility of performance of the acts, limits of the parties as well
as the formalities surrounding the contracts.

Agreement

The parties to the contract must be in agreement. This can be described as union of minds or
coincidence of will, that is thinking towards the same goal, which is termed consensus ad
idem. Agreement comes to be when there is a valid offer and a valid acceptance. Essentially,
agreement = offer + acceptance. The elements of valid offer are

 the existence of intention, that is, it should be evident that the parties involved are
willing to commit to an engagement.
 setting out of all material and essential terms of the contract, it should not be vague.
All terms must be put out in the open with clarity.
 offer must be firm and unambiguous, must be addressed to a person and offer must
comply to the formalities of contract law.
 Offer should be addressed to some person; The offer should be communicated to who
it is intended and the receipt of the offer must be acknowledged. There should be a
difference between an offer and an advert as an advert does not constitute an offer but
rather an invitation to treat.

An acceptance is confirmation of agreement with the terms on offer exactly as given in the
offer. Conditions of a valid are express confirmation where the offeree confirms acceptance
verbally, tacitly that is without actually admitting to the acceptance. However, there are some
instances where the law requires for written acceptance. Acceptance is considered valid when
it meets the following requirements

 There must be intention to contract, consensus ad idem, the agreement should

correspond with the terms of the offer
  Acceptance must be unambiguous; acceptance should be based on the terms of the
original offer. If there are changes, this now constitutes to a counter-offer, which
cancels the original offer and may or may not be accepted. If the counter offer is not
accepted, there has to be agreement between offeror and offeree to revert to the
original offer if they resort to doing so.
 Can only be accepted validly to the person to whom the offeror intended to contact. A
third party cannot accept an offer that was not made to him even if the offer has not
been accepted by the offeree.
 Offeror must know of the offer when accepting it. A person cannot make a claim on
an offer if they did know about it. For example, in the case of Bloom vs American
Swiss Watch company. Bloom provided evidence that led to jewel thieves. Later he
discovered that there was a reward and tried to claim that reward, however the courts
denied this as he could not accept an offer that he did not know about.

Certainty

From the requirements of offer and acceptance that require certainty, comes about the
requirement for contract conditions to be certain. A contract should have clear terms and
where there lacks certainty the contract is void for vagueness. There is no contract at all.
There should be no term that is left with room for manipulation or loop holes that can be
taken advantage at the expense of the other party. For example, if a contract leaves unlimited
discretion on certain factors, this allows the party to act only when it is convenient for them.

Intention to contract

The term “Animus contrahendi” – the serious intention to be bound by the contract applies
here. Parties should understand and be willing to be legally bound, that is to create a legal
relationship that is based on laws and in the event of disputes can be taken to court. Contracts
of a business nature are assumed to be legally binding, unless it is stated upon forming the
contract that it is not legally binding. Serious intention is sufficient to make a contract valid.
Capacity to contract

Both the offer and the offeree should have legal capacity. Legal capacity refers to being able
to sue or be sued. Certain categories of people have limited capacity to contract. There are
special rules that surround their ability to enter into contracts. Such groups are minors,
insolvents, prodigals, married women, insane and intoxicated persons.

In Zimbabwe, the age of majority is 18, and it is only when a person reaches that age are they
able to contract, unless they are tacitly emancipated. If a minor enters a contract without the
assistance of an adult, the contract is considered void as far as the minor is concerned. An
unassisted minor cannot be held liable contractually unless in the following circumstance:

 Unjust enrichment, that is where the minor has an unjustified financial gain. The
contract remains void, however the minor is still liable.
 Fraudulent misrepresentation, where the minor misrepresents his age to make
themselves seem that they are able to contract, (over 18), the minor is liable for
damages, however the other person must prove that they were misled
 Tacit emancipation, when a minor is allowed by their parent or guardian to carry
business or employment on their own. The minor might be working and living alone.
In this case, the minor may engage in contracts.
 Ratification, this occurs when a minor enters into a contract when they are below the
age of majority then attains the age of majority in the course of the contract. Once the
age of majority has been reached, it will be as if the minor entered into the contract as
an adult.
 Statutory exceptions, these are situations that have been allowed by the law, e.g. the
POSB Act allowing children to have bank accounts.

Insane persons are people who are deemed, medically, not in a position to make decisions for
themselves due to illness. If a person suffers from mental illness during the time of
contracting, the contract is considered to be void as they have no contractual capacity. The
same applies for intoxicated persons. In both situations, the main there is need to identify that
at the time of contracting was the person so insane or intoxicated that they could not reach
consensus, that is there was no real meeting of minds or that there was just a mere affecting
of judgement.
Insolvency occurs when a person is in so much debt that the courts take over control of
remaining assets. According to the Insolvency Act, an insolvent is not allowed to sell any
property, be a director of a company, hold a liquor license or enter any contracts that may
affect the estate adversely. Their contractual capacity is generally limited. Similar to these are
prodigals, who are people who have been determined by the courts to have a high probability
to squander his/her property. They cannot enter into a contract without the assistance of a
curator.

The contractual capacity of married women is also limited by the marriage act, depending on
whether she is married in community or out of community of property.

Legality

A contract should be based on lawful and moral acts. If it fails to comply with the law, it is
considered void and is unenforceable. For example, a hitman who has not been paid for a
murder carried out cannot seek justice from the courts as the contract is void from the
beginning, which is termed void AB initio. Therefore, if parties decide to engage in contracts
that are illegal, the first law of equity applies, which states that if your hands are not clean,
the loss will lie where it falls.

Possibility of performance

The parties to the contract must agree on an objective that is achievable. An obligation cannot
be created on an impossible task. Subjective impossibility is when one party might feel that
the task is possible while the other feels it is impossible. In this case, this creates an
obligation and the debtor may be liable for breach of contract if they fail to perform.
Objective impossibility is when the task cannot be performed in the eyes of the law, this is
usually physical impossibilities e.g., selling a non-existing thing. In that case, there is no
obligation.
Limits and formalities

The parties to the contracts should be within their limits to render the contract valid. That is
either party should be in a position to sue and be sued. This means that a third party cannot
sue one of the parties for damages to the other party.

Formalities that have been prescribed should be followed to render the contract legal. for
example, a contract for the sale of land should be in writing according to law. A verbal
contract, although having all other essential elements will be void without the written aspect
of the sale. Although it is not all contracts that have to be written the advantages of having
written copies of the contracts such as more time for consideration, proof and a reference
point, have led to most contracts being written down.