Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

BUSINESS LAW1
Part A
Issue
Whether Lincoln can recover damages from Washington for the breach of the contract
instituted between them.
Rule
The presence of validity instituted contract among two of the parties involved is to be
conceived as being instituted in adherence with all the requirements that needs to be abided by
for creating a valid contract. For claiming a contract to be valid the parties involved should
establish the presence of all the five elements of a validly created contract. This can be best
explained with the legal principle inculcated within the case of Appleson v Littlewoods 1939.
Firstly, the foundation of a valid contract is to be laid down by establishing an adequate
agreement with the involvement of an offer that has been initiated by the on of the parties and
which has been adequately presented with acceptance from the party to whom the offer has been
means. This can be best explained with the legal principle inculcated within the case of Smith v
Hughes [1871] LR 6 QB 597.
Secondly, the contracts in question is always required to have an underlying motive of
the parties involved to institute a legal relationship between them. This can be best explained
with the legal principle inculcated within the case of Rose & Frank Co. v JR Crompton & Bros
Ltd. [1923] 2 K.B. 261.
Thirdly, there has been a requirement for a valid consideration being present for both the
parties to a contract that has been adding some value to both of them for making the contract

BUSINESS LAW2
legally enforceable. This can be best explained with the legal principle inculcated within the case
of Currie v Misa (1875) LR 10 Ex 893.
Fourthly, the consent of the parties involved in a contract is required to be free from any
external forces so as to induce the same for rendering the contract to be valid. This can be best
explained with the legal principle inculcated within the case of Gordon v Selico (1986) 18 H.L.R.
219.
Fifthly, the parties involved in a valid contract is required to have the capacity of
instituting a contract. In this context it can be stated that the term capacity of the parties can be
construed to depict a situation where the parties involved or any of the parties involved does not
have a proper understanding regarding the terms or nature of the contract they have been
aggreeing to. This can be best explained with the legal principle inculcated within the case of
Simpkins v Pays [1955] 1 WLR 975.
The persons who has not been mentally fit or has been suffering from any mental ailment
would require the assistance of a guardian for the purpose of making transactions with third
parties. However for the purpose of establishing the person to be mentally unfit for entering into
the contract it needs to be established that he has not been under the capacity to understand the
severity of the terms inculcated within the contract. In case the medical illness has not been
impairing the judgement of the alleged person the contract cannot be said to have been voidable.
However contract for necessaries provided to a person suffering from mental illness is voidable
at the option of the mentally impaired person. This can be best explained with the legal principle
inculcated within the case of Imperial Loan Co. Ltd. v. Stone [1892] 1 Q.B. 599.