The elements of a valid contract are offer, acceptance, consideration and the intention to create legal relationship, though parties to a contract do not consciously contemplate these elements when entering into a contract of business transactions. Very often what one party regards as a clear-cut case of offer or acceptance is firmly rejected by the other party who claims that it is something else. Hence, related factors like invitation to treat, counter-offers, cross-offers, conditional acceptance, provisional agreements, acceptance in ignorance of offer, have all develop together with the study of what constitute an offer and acceptance respectively.
For a contract to exist there has to be an offer by one party to another and an acceptance by a person to whom the offer is addressed. An offer may be defined as a definite undertaking or promise made by one party with the intention that it shall become binding on the party making it, as soon as it is accepted by the party to whom it is addressed. An offer must be precise and unequivocal, leaving no room for speculation or conjecture as to it real content in the mind of the offeree. The offeror must place at the door steps of the offeree, a clear intention and desire to enter into a contract with the offeree on clearly defined terms. The person making the offer is known as the offeror, and the person to whom it is addressed, the offeree. Thus, all situations involving the sale of goods and property must also involve offer and acceptance. Indeed, the routine daily activities performed by most human beings are contractual in nature and can be analysis into situation of offer and acceptance. A housewife who goes to the local market makes an offer for all the various items of food she wants to buy and the seller accepts. Conversely, the seller who calls out on prospective customers makes an offer for the prospective customer to accept.
Acceptance is defined as a final and unquantified expression of assent of the terms of the offer. What constitute acceptance was given a comprehensive definition by Tobi J. C. A. as he then was, in Orient Bank V Bilante International Ltd. as follows;
“An acceptance of an offer is the reciprocal act or action of the offeree to the offer in which he indicates his agreement to the terms of the offer as conveyed to him by the offeror. Putting it in another language, acceptance is the act of compliance on the part of the offeree with the terms of the offer”.
A valuable consideration in the eyes of the law may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other. Thus, consideration does not only consist of profit by one party but also exists where the other party abandons some legal rights in the present, or limits his legal freedom of action in the future as an inducement for the promise of the first. So it is irrelevant whether one party benefits but enough that he accepts the consideration and that the party giving it does, thereby undertakes some burden, or lose something which in contemplation of law may be of value.
Thus, in order to be able to sustain an action, the plaintiff must prove either a benefit conferred by him on the Defendant or on someone else at the instance of the Defendant or a detriment suffered by him (the plaintiff) in the implementation or fulfillment of the terms of the bargain. In a simple agreement for the sales of goods, for instance, the seller’s consideration is the promise of transfer or actual transfer of his title to the goods or possession. The buyer’s consideration is the money he pays or promises to pay for the goods.
INTENTION TO CREATE LEGAL RELATIONSHIP
There is a general presumption of law that parties to a simple contract generally, even though not shown, may intend to have a legal relationship. It must be stated however that such presumption can be rebutted by the parties in other cases in which case, parties may not be able to bring an action in court.
It is however safe to rely on the presumption of law in this regards until the contrary is proven. The legal element of intention to create legal relationship as a component part of a valid contract must be inferred in contractual transactions even when parties appears not to be conscious of this very fact. Where any of these four elements are not present in a contractual transaction, such contract will not be enforceable under the Nigerian Law.