Contract Elements and Complexity

What are the elements of a valid contract, and why does contracting get complex?

Acquisition by contract

The business of contracting

·         Invokes an entirely new dimension

·         Into "normal" project work

·         It introduces the long and traditional background of the legal profession

·         However, contracting arrangements are very flexible

·         But they can also be very complex

Complexity of contracting

·      The more complex the arrangements

·         For example, the number of concurrent contracts

·         And/or subcontracts involved

·         The more risk there is to the project

·      Where multiple contracts are involved

·         There is the significant issue of who takes responsibility

·         For coordination, integration and configuration

·         Of the various elements

·      These are frequent areas of contractual conflict

·         With unnecessary delay and expense

Elements of a valid contract - 1

·      In the western world, at least

·         Certain considerations appear to be essential

·         For a contract to be valid

·         And supportable by applicable law

·      However, as we said earlier

·         Specific contractual requirements

·         And interpretation of wording

·         Varies from legal jurisdiction to jurisdiction

Elements of a valid contract - 2

The essential contractual elements appear to be

·         Mutual assent

·         Lawful objective

·         Capacity of the parties to perform

·         Consideration

·         Appropriate form

Elements of a valid contract - 3

·      There is a further implication

·         That both parties enter into the contract freely

·         And without coercion of any kind

·      If these conditions are not met

·         All or part of the contract

·         May be invalid

·      The five elements on the previous page

·         Are described in the next Issacons