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Elements of Agreements Assignment

   

Added on  2020-03-23

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Question 1Answer: There are certain elements, the presence of which turns an agreement into a contract.Due to this reason, it has been said that all contents are agreements, but all agreements cannot bedescribed as contracts. In this way, if all these elements are present in case of an agreement, suchagreement turns into a contract that is legally binding for the parties. These elements include therequirement that one party should make an offer to the other. However, an offer can also bemade to a group of persons or even to the whole world (Carlill v Carbolic Smoke Ball Co, 1892).Similarly, the offer needs to be accepted by the other party (Harvey v. Facey, 1893). Theacceptance should be unequivocal. If new terms are introduced while accepting the offer, suchacceptance is not a valid acceptance and it amounts to a counteroffer (Hyde v Wrench, 1840).Another requirement is of the presence of consideration. Consideration can be described as theprice paid by the parties in return of the promise made by another party. It is not necessary thatthe consideration it always did present in the form of money (Chapple v Nestle, 1959). Similarlyit is also required that the parties should have the intention of entering into a legal relationship.This requirement distinguishes a legally enforceable contract from a simple promise made infamily or social context. Therefore, some promises made to family members or friends etc. arenot enforceable by law. The parties to the agreement should also have the legal capacity to enterinto the contract. It is also important that the parties entered a contract after they have properlyunderstood the terms of the contract. The consent of the parties should not be initiated by factorslike undue influence, fraud or duress. In such cases the contract may become illegal and void.Therefore the elements that are necessary for the formation of a valid contract are:-

offer: one party should make an offer to other. An offer also needs to be distinguished from amere invitation to treat, for example, an advertisement.Acceptance: the offer needs to be accepted by the party to whom it was made. If any new termsare introduced while accepting the offer, such acceptance is not valid, and it is considered as acounteroffer. The effect of making a counteroffer is that the original offer can no longer beaccepted.Consideration: concentration can be described as the price paid by the parties in return of thepromise that has been made by the other party. There are certain rules related withconsideration. For example, past consideration is not treated as a valid consideration (ReMcArdle, 1951).Capacity: the parties should have the legal capacity. For example, minors, persons of unsoundmind and bankrupts are not allowed to form a legally enforceable contract.Mutuality of obligations: in case of a valid contract, both the parties should accept theobligations that have been imposed on them by the contract (Pearce v. Brooks, 1866).

Question 2Answer: The law does not impose any condition according to which a legally enforceablecontract should always be in writing. Therefore, a valid contract can also be created orally.However there are certain contracts, which are required to be created in writing. Similarlyalthough oral contracts are also legally enforceable but generally a difficulty arises in enforcingthe terms of oral contracts. This difficulty arises due to the fact that when a contract has beentreated poorly by the parties, a record is not present regarding the terms of the contract. As aresult, it becomes difficult to establish the terms of an oral contract. At the same time, it is alsoimportant to be aware of the types of contract that required by the law to be created in writing.Generally, the contracts that are required by the law to be created in writing include the contractsconcerning real property, certain debts or related with money over particular amount. However,the law does not require that each and every contract should be created by the parties in writing.Hence, if the elements that the necessity for creating a valid contract are present, even an oralcontract can be enforced by the law. Therefore, while the parties entered into a transaction ingood faith, but a well drafted contract that has been reduced to writing is capable of providingthe best protection to the parties in case a dispute arises between the parties. On the other hand,when a small sum is involved in the contract or, in case of a simple contract, the need for havinga written contract is also less. Therefore, it can be said that it is not necessary in all cases that avalid contract should be created in writing. Still, it is a good idea to reduce the contract towriting, because in such a case. It is easier to establish the contractual terms. Q 3

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