(a) List and explain four elements of a valid contract
(b) Explain four duties of an agent to the principal.
(a) Elements of a Valid Contract:
(i) Offer
(ii) Acceptance
(iii) Consideration
(iv) Contractual capacity
(v) Legality
(vi) Formality.
(i) Offer: This is a proposal from one party to another or persons stating their intention to enter into contract on the term stated.
(ii) Acceptance: This is a confirmation by the person to whom the offer is made, of his intention to accept the term offered.
(iii) Consideration: This is the value in exchange between the parties in a contract.
(iv) Contractual Capacity: All parties to a contract must be capable of entering in the type of contract they wanted to enter into e.g. the person must be of age and not a minor.
(v) Legality: The object of the contract itself must be legal, if not, the contract is void and cannot be enforced.
(vi) Formality: This refers to the form a contract must take to be valid, i.e. whether it should be in writing or oral, etc.
(b) Duties of Agents to the Principal.
(i) He must obey lawful instructions of his principal
(ii) He must not compete with his principal
(iii) He must render account of his stewardship
(iv) He must not delegate his duties to another person.
(v) He must be honest in his dealings/must not make secret profit.
(vi) He must exercise reasonable care and skill in the performance of his duties.
(vii) He must keep his principal's affair secret.
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