Chapter 2 - Contracts

Abstract

Contracts are important to agricultural development in sub-Saharan Africa. Lawyers and economists need to understand basic contract principles to assist stakeholders in the agriculture and agribusiness value chains, including input (seed, fertilizer, equipment) and credit markets, forward contracting and proper contract specification so that resources move to their most-valued uses. Basic elements of contract formation include a meeting of the minds by the parties, competent parties, proper subject matter, offer, acceptance, and consideration. The Coase theorem and the significance of transaction costs in contract formation are discussed. Excuses for nonperformance of a contract, and remedies such as the determination of specific and general damages are also discussed. The use of the principle of “balance of probabilities” in resolving contract disputes, and the importance of reducing parties’ agreement to writing under the statute of frauds are also discussed.