Elements of a Valid Contract: A Legal Analysis

This assignment delves into the essential components of a valid contract, including offer, acceptance, consideration, and capacity. It examines the importance of these elements in forming a legally binding agreement between parties. The analysis also considers the implications of breaching a contractual obligation, as seen in the case study involving Gareth's event organization business and singer who refused to perform.

COMMERCIAL AND
CORPORATIONS LAW

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Correct area of law and legal rules.........................................................................................1
Application of legal rules.......................................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Contract is the legal agreement between two parties in which both involved people have
some rights and obligations (Fried, 2015). Offer, acceptance and consideration are the elements
of legal contract. Present study is based on contract between Gareth and girl who came to this
place to celebrate her birthday. Current assignment will discuss rights and obligation of the
parties in light of law. It will explain legal application of the rules.
MAIN BODY
Correct area of law and legal rules
Gareth has owned an event business. He has organised a music concert. One girl who has
come to this place for celebrating her birthday has faced disappointment because singer has
refused to sing a song (Stone and Devenney, 2017). One accident had occurred in which Event
rental Pty Ltd which was hired for providing large tents, portable stage etc. has meet with car
accidents and in this accident, entire items got destroyed. Gareth has made arrangement of sub-
standard sound system but singer refused to sing a song by using sub-standard sound system.
Now, girl seeks 1000 for disappointment and need refund of 800.
Commercial law has several elements: offer, acceptance and consideration. As singer and
Gareth both have accepted terms and conditions of the contract (Elfakhani and Sidani, 2015).
Gareth has offered benefits to the singer for singing a song in the event and singer has accepted
his offer. Consideration was another major element in which Gareth has considered to give
enjoyment to the audience and audience have made payment for the same.
It was liability of Gareth to organise event in an effective manner (Smits, 2017). For
various activities that will be taken place in the event, he has charged amount from audience
thus, it is obligation of Mr. Gareth to organise event as he has promised to the audience. He has
announced that there will be a singing show but if singer is not ready to sing the song, then it
would be liability of the owner to make him ready otherwise, he will be liable to return the
charged money to the audience (Ambrus, Calvano and Reisinger, 2016).
Right of Julie
Commercial contracts form between buyers and sellers in which third party means buyer
does not sign the actual contract but they are part of this contract. Commercial law gives rights to
the third party person to sue the seller if seller fails to provide promised services to consumers. In
the present case, Gareth has promised to conduct as singing show in the event but now due to
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accident, singer is now refusing to sing a song with sub-standard sound system. Thus, Julie has
right to sue against Gareth and ask for compensation (Willett, 2016).
Liabilities of Julie
In the present case Julie is liable to bear this loss because there was no official contract
between Julie and Gareth regarding payment refund.
Rights of singer
As in the case contract has been made between singer and Gareth that singer will sing a
song in the event. But he was expecting to sing a song by using quality sound system. But as
now the promised sound system is not available in event thus, he has right to cancel his show of
singing. He has right to claim against Gareth for not refusing from his statement of proving
quality sound system.
Liabilities of singer
Furthermore, contract element acceptance play significant role in the entire commercial
law. If one person accepts their terms and conditions, then he will be bound to fulfil their
obligation otherwise, other party can file case against the person. As in the case of Gareth, singer
has accepted to sing a song but due to this car accident and damage of sound system, he has
refused to sing song. Singer is breaching the law and he is liable to get punishment (Bending,
2015). He can not refuse to sing because he has accepted payment for them same thus, individual
is liable to repay the whole amount and pay compensation for the damage to brand image of
Gareth.
Rights of Gareth
Gareth has right to sue against the singer for refusing to sing a song. The car accident that
has taken place was the natural issue and nobody was responsible for the same thus, singer
cannot say no to sing a song in the party because of availability of sub-standard sound system.
Singer is breaching the law thus, Gareth has right to sue against the singer (Curtis, 2014).
Liabilities of Gareth
Gareth is liable to pay compensation to the Julie for her disappointed because he has
made promise to organise singing show in the event, but no singing show had been occurred.
Furthermore, audience those who have paid 800 for this event, Gareth is liable to pay this
amount to them.
Rights of event rental Pty Ltd
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Event Rental has right to defend own self because meeting with the accident was the
natural issue, it was not being dine intentionally. It has right to claim insurance amount for all its
damages and loss.
Liabilities of Event rental Pty Ltd
As contract made between event rental and Gareth that event rental firm will provide
sound system to the Gareth for the event show but as he has not fulfilled his promise. If it met
with the accident then it can claim for insurance but it is liable to pay to the Gareth for the loss
he has faced due to their negligence.
Application of legal rules
Offer is the statement of consent by one person while entering into the contract. In the
commercial contract business owner has to make the legal agreement with involved persons.
Owner offers some benefits so that other party take interest to come into the contract. It is
essential that offer needs to be full and must be able to be accepted by other party. Once offer is
being accepted by the other party then legal agreement of contract make between both. Offer
can be implied. Implied terms are the terms in which all the details of benefits on which other
person have become ready needs to be included in the legal document (Howells and Weatherill,
2017). Acceptance is another major element of the legal commercial contracts. A complete
contract can be formed when other person accept the terms and condition or offer of the first
party. It is essential that offer needs to be accepted by the person without involving the new term
into contract. If other party has some issue and want to include some new terms then new offer
will be given by first party to the person and it will be termed as counter offer. If individual
accepts the counter offer, then these new terms become the main terms of the contract and on the
bases of these conditions, commercial contract is formed between two persons. Fisher v. Bell
196 is the good example of offer element in commercial contract. In the contract, offeree and
offeror are two main persons. One offer the things to other party and other accept these offers. It
is essential that offeree shows their concern for the contract (Krähmer and Strausz, 2015).
Harvye vs. Facy 1893 is the great example of acceptance. After acceptance of all terms and
condition, the valid contract is being formed (Contracts - Elements Of A Contract, 2018). There
is essential that all these terms clauses be clear and no hidden clauses are present in the contract
otherwise, it will be invalid contract. It is essential that both involved parties have sound mind
and must be mature to understand terms and conditions.
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Consideration is another major legal term in the commercial contracts in which one party
considered to give certain benefits and other gives payment for getting these benefits. Thomas v.
Thomas 1842 is the good example of consideration. It is essential for the both parties to have an
intention to create a legal contract (Krähmer and Strausz, 2015). If any participants does not have
intention to create legal contract then this contract will not be considered as valid. Jones vs.
Pasavatton 1969 explains the same thing. Both the parties need to have capacity to enter into the
contract. Both must be sound mind and are able to understand all terms and conditions.
As in the case singer has accepted that he will sing a song in the event thus, he cannot
refuse to sing a song in party event (Curtis, 2014). It will consider as breach of law and
individual will be liable to pay compensation to the Gareth for his breaching of the contract.
Furthermore, in the given case scenario Gareth who is owner of event organisation business has
taken money from the audience for this event and has promised to conduct amazing singing
show. But due to refusal of singer, now this singing show cannot be held thus, owner is unable to
fulfil his promise to the audience and Julie. Thus, he is liable to return their money and pay
compensation for her disappointment (Stone and Devenney, 2017).
CONCLUSION
From the above report, it can be concluded that commercial law has several elements:
offer, acceptance, consideration etc. It is essential that both involved parties form a legal contract
by accepting all terms and condition. There should not be any hidden clauses. If any person is
breaching the legal agreement, then individual will be liable to pay for the same.
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REFERENCES
Books and Journals:
Ambrus, A., Calvano, E. and Reisinger, M., 2016. Either or both competition: A" two-sided"
theory of advertising with overlapping viewersh
Bending, Z. J., 2015. Reconceptualising the doctor–patient relationship: Recognising the role of
trust in contemporary health care. Journal of bioethical inquiry. 12(2). pp.189-202.
Curtis, S., 2014. The law of shipbuilding contracts. CRC Press.
Elfakhani, S. and Sidani, Y. M., 2015. 6. Uncertainty or ‘gharar’in contracts under the Islamic
ethical code. In Handbook of Research on Islamic Business Ethics. Edward Elgar
Publishing Cheltenham.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University
Press, USA.
Howells, G. and Weatherill, S., 2017. Consumer protection law. Routledge.
Krähmer, D. and Strausz, R., 2015. Optimal sales contracts with withdrawal rights. The Review
of Economic Studies. 82(2). pp.762-790.
Smits, J. M., 2017. Contract law: a comparative introduction. Edward Elgar Publishing.
Stone, R. and Devenney, J., 2017. The modern law of contract. Routledge.
Willett, C., 2016. Fairness in consumer contracts: The case of unfair terms. Routledge.
Online:
Contracts - Elements Of A Contract. 2018. [Online]. Available through:
<http://law.jrank.org/pages/5690/Contracts-Elements-Contract.html>.
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