The formation of a contract 

In order for the parties to be able to enter into a contract, both parties must have the capacity to enter into the contract and the contract has to be able to be performed. If the courts later find that one of the parties lacked the capacity to enter into the contract then the contract might be regarded as void or voidable.

In order for Katie to safeguard her interests, she can include express terms into the contract. Express terms can be either oral or in writing and are statements that are made by one of the parties with the intention that these terms be incorporated into the contract. Implied terms are terms that are deemed to be necessary in order to bring the contract into line with the presumed intention of the parties3. Implied terms are often used in order to make an incomplete agreement complete. An agreement to complete a project by a specific date would be regarded as an express term of the contract. Failure of the party to complete the work by the agreed date would amount to a breach of the contract, entitling the aggrieved party to be able to claim for any losses incurred as a result of that breach. Terms can be implied by the courts in cases where there have been regular contracts between the parties. In such cases, the courts might determine the existence of a term through trade or custom4. The courts might also apply this principle of the work is being completed in stages. In such circumstances, the continued trade between the parties would allow the court to imply terms into the contract.

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She could also create a unilateral contract rather than a bilateral contract. With a bilateral contract, both parties make specific promises to each other.

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