(a) What is a contract?
(b) Explain six reasons for which a contract can be terminated.
Explanation
(a) A contract is an agreement between two or more parties that is enforceable by law.
(b) Situations under which a contract can be brought to an end are:
(i) When there is an alteration of a written law affecting the contract.
(ii) When one of the parties breaches or if one of the parties refuses to carry out his own obligation in a contract.
(iii) When all the parties to the contract have carried out their obligations to the contract.
(vi) When one of the parties expresses a desire not to go ahead with the contract provided such withdrawal does not constitute any loss to the other party.
(v) When the parties voluntarily agree to discontinue the contract especially when negative results are imminent.
(vi) If the subject of the contract is illegal, e.g prostitution or contract with a minor below the age of 18 years, the contract can be terminated except for the contract of necessity.
(vii) If the contract becomes frustrated by an act of God, e.g. flood, disaster, death, war, etc.
(viii) If the law discontinues the contract owing to bankruptcy.