There must be an agreement between the people about what each person must do in terms of the contract. In other words, there must be an offer by one person and an acceptance by the other. The offer must be serious and definite, not vague. For example, Khanya says to Anne, ‘I will buy your car some time in the future if it suits me.’ Anne agrees to this. There is no contract because the offer was not serious or definite.

The person making the contract must have the legal power to enter into the contract. Examples of people who don’t have legal power to enter into contracts are:

• Children under 7 years
• People who are insane
• People who are very drunk or drugged

A person cannot enter into a contract if it is impossible to carry out what is in the agreement. For example, someone agrees to sell you a house and you agree to buy that house. But the house gets washed away in a flood before you sign the agreement. So, it is impossible for the contract to be enforced because there is no house.

The contract should be legal and not contra bonos mores. In other words, it should not be illegal or go against the morality of society. For example, if a person agrees to hijack a vehicle in return for money, the contract is void. It is not a proper contract.

It is always better to have a contract written down. This is because it can be difficult for parties to prove the terms of a verbal (spoken) agreement. In the event of verbal agreement, it is advisable to have a third party present.