Contract and Its Elements: Assignment
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Added on 2020-03-28
Contract and Its Elements: Assignment
Added on 2020-03-28
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1SolutionA.Contract and its elements When two parties desire to enter into a contractual relationship then the same can be done byforming a contract. A contract is an agreement which is enforceable in law. An agreement is theexchange of offer and acceptance by the offeror and offeree.1Thus, considering the concept of agreement and contract the main essentials required for theformation of a contract are:i.An agreement – An agreement is formed when an offer is supported by anacceptance. thus, there are two requirements to make an agreement:a.An offer is the first essential ingredient in contract formation. It is a proposalwhich is intended by the offeror and which he transfers to an offeree orally or inwritten form. It is a promise to do or not to do certain tasks in exchange ofpromise on the part of the offeree2;b.An acceptance is the second ingredient and is the intention of the offeree which iscommunicated in favor of the offer that is received by him. An acceptance is theapproval of the proposal which is reciprocated to the offeror3.ii.When an offer and acceptance is made then the parties enter into an agreement. Thisagreement gets the enforceability of law when it is supported with some gain/benefit.The consideration moves from the promisor to the promisee to support the promisesthat are exchanged amid the parties4;iii. The offeror and offeree when making the promises should have legal intonation.Legal intention portrays that the parties are willing to go to the court of law in casesof disputes5. iv.The offeror and offeree should also be the parties who are capable to make a contract,a person is said to be capable when he is not suffering from any kind of mentalincapacity. Also, the parties should have attained the age of majority as per the law ofthe land.1Kim Forrester, Debra Griffiths, (2014) Essentials of Law for Health Professionals – eBook. Elsevier Health Sciences.2Gibson v Manchester City Council[1979].3Nissan UK Ltd v Nissan Motor ManufacturingUK Ltd [1994].4Williams v RoffeyBros & Nicholls (Contractors) Ltd [1989].5Hadley v Baxendale[1854].
2All these essentials together make a contract which is enforceable in law. B.Need of Written contract A contract is a document executed by private parties by complying with the elements of contract.In Australia, there are two kinds of contracts that can be made by the parties:6The contract that is made by the parties orally or verbally are oral contracts and the contract thatare made by the parties on a piece of paper are written contracts. Both oral and written contractare valid in Australia, the only requirement is that both the contract must comply with theelements of contract. Thus, there is no law that a contract has to be in writing in order to bebinding. An oral contract has equal sanctity in law. However, it is seen that the written contracts are always preferred when compared with an oralcontract. The basic reasons are:7i.That it is very easy to gave meaning to the contract terms if there is ambiguity in thecontract;ii.The true intention of the parties can be determined;iii.Human mind is very freckle and parties tend to forget the terms. If the contract willbe in written form then it is easy to determine the intention of the parties;iv.Courts are more inclined to rely on written terms when compared with oral terms.Hence, written contract are preferred over oral contracts even though both are valid in law.C.Formal Contract and its requirementsNormally when all the contract elements that is, offer, acceptance, intention, consideration andcapacity of the parties are comply with then a contract is formulated by the parties. A contractcan be oral or written. Bit, apart from these two contracts there is also one kind of contract whichis called ‘Formal Contract’.86Emmanuel Laryea (2002) Paperless Trade:Oppertunities, Challenges and Solutions, Kluwer Law International.7 Findlaw (2017) Is a verbal agreement legally binding?<http://www.findlaw.com.au/articles/5626/is-a-verbal-agreement-legally-binding.aspx>. 8Paul Latimer (2012). Australian Business Law 2012. CCH Australia Limited.
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