Historically, the courts would only enforce agreements if they were formally recorded in a special document called a 'deed' and then 'sealed' with imprinted wax. In modern times an agreement executed in a formal deed remains enforceable at law, but it is impractical to insist that all contracts be formally executed in this way. It is commercially convenient that, to some extent at least, informal agreements should also be legally enforceable.

But to what extent can informal agreements be legally enforced? Should ALL informal agreements be enforceable by the courts as long as the parties intended to be legally bound? Or should some distinction be drawn beween informal agreements which are legally enforceable and those which are not?

In this section we consider how the concept of an 'exchange' is used to decide, in particular cases, whether an informal agreement (one that is not contained in a deed and sealed) is legally enforceable.

Work through the examples in this section until you are sure you understand them, and that you can remember the rules of law that are applied in each case.