The Essential Ingredients Of A Contract

A Basic Recipe For Contracts
(and a smelly wizard)

The Essential Ingredients Of A Contract

Today we’re going to get down and dirty with some basic law of contracts. Sure, sure, you’re not a lawyer but contracts are part of our daily lives to varying degrees. From that software update where you click ‘I Agree’ (be honest, do you actually read it? All of it?), to other more complicated contracts like shareholders, employment etc. etc. If you learn to recognise these elements, it’ll not only help your business, it can also help you avoid potential legal mistakes. Of course it’s always best to hire a lawyer but basic legal knowledge is always an advantage – forewarned is forearmed.

Anyway, we’ll be going on a lovely adventure to help explain said elements of a contract. Put on your walking boots folks and lets get cooking!

The 5 Essential Ingredients Of A Contract



This is the first part of a contract that states the purpose of the contract.

Intention To Enter Legal Relations
GIF: Giphy

For example, one day you wake up and think, “Hot diggity, I want to buy a car!” That would be your intention to enter legal relations.


Having established that you intend to enter legal relations for a car, you trot down the road towards the nearest car dealership. Suddenly a scraggly face peers out of the bushes,

The Essential Ingredients Of A Contract- offer
[GIF: Giphy / Gavin Reed]

 “Psst! Hey, wanna buy a car? You can have it for RM100!” and there’s the offer folks!


“Okay, show me the car.” you say to this weirdo. With an unpleasant crackling of joints, a smelly unkempt fellow ambles out of the bushes and farts lazily on your foot. He notices the indignant look on your face and points behind you. “Check it out bruh, that’s the car. Yours for RM100 – it’s a steal.”

Clearly you lack common sense because you decide to accept this smelly wizard’s offer like this:

The Essential Ingredients Of A Contract -acceptance of offer
[GIF: Giphy]


“Sweet bruh. You bring me RM100 in cash before 10pm today and I’ll immediately give you the car keys.” cackles the smelly wizard. He’s laid out the terms of the contract clearly so you both know what your obligations are (ie. certainty).

The Essential Ingredients Of A Contract -certainty
[GIF: Giphy]


This is the part where you weigh up the value of what you’re getting versus what you’re giving. If you give the smelly wizard RM100 before 10pm, you’ll get a car at an insanely low price. But where has that car been? Who is this mysterious and smelly wizard? What if that car is stolen? You’ll never know.

The Essential Ingredients Of A Contract -consideration
[Gif: Giphy]


Welp, that’s all folks. We hope that contracts make a little more sense to you now and you’ll be able to spot a solid contract a lot easier. Don’t worry, the smelly wizard was just an actor.

…Probably an actor.

Okay we have no idea who the smelly wizard was. He was not part of the plan.


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Disclaimer: The content provided on this website does not constitute legal advice but are for general informational purposes only. It may not be the most up-to-date legal information after the published date. To seek professional legal advice, please check with your lawyer.