WAEC Commerce 2012 Theory — Question 7

Model answer

(a) Contract: This can be defined as agreement between two or more parties to discharge some responsibilities for consideration. It involves offer and acceptance. (b) Elements of a valid contract: - offer - acceptance - consideration - ability - validity (c) Ways a contract can be discharged: - frustration on the part of a party: If one of the parties to the contract is unable to discharge his responsibility, it may lead to frustration on the part of the other party and this is a valid point to terminate the contract. - insolvency: If a party to the contract became insolvent such that it cannot pay its consideration to the contract, then, such contract can be terminated. - discharge of the contract: If a party to the contract has discharged all its duties to the contract, the contract will be terminated. - expiration of the contract period: when the time specified for the contract to be executed expires, such contract can be terminated.