Contract Business Law Assignment
Added on 2020-03-23
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Business Law AssignmentContract(Student Details: )
CONTRACT2Question 1Contract is a legally binding document which contains a promise where one side of the contracting party undertakes a promise to fulfil to do certain task and the other side of the contracting party undertakes the promise to create legal relations (Latimer, 2012). The contract formation requires presence of certain components, which are the agreement component, i.e., offer and acceptance, followed by elements of consideration, consent, clarity, intention and capacity. In order to create a legally binding contract, there is a need for all of these components to be present, or else, the contract remains non-binding document (Clarke & Clarke, 2016).The contract begins when an offer is made by one person to another person, in which the first person offers some conditions or terms to the second party. It is important that clarity is attained between an offer and an invitation to treat (Andrews, 2015). This is because an offer is apart of contract formation and is obligatory to be present for a contract to be valid, but the same is not the case when it comes to an invitation to treat. The offer shows that the parties want to create a contract and thus, have legal liabilities. However, an invitation to treat shows that the person wants to start up the negotiations (Ayres & Klass, 2012). The differentiation between these two can be highlighted through different case laws. In Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, the court stated that a unilateral offer had been made as the acceptance could be attained merely by acting upon the offer and the acceptance did not require a communication. However, this is generally not the case and the commercials in the magazines or newspapers are deemed as an invitation to treat as was seen in Partridge v Crittenden [1968] 2 All ER 421. Where an invitation to treat has been made, the party who puts on something for sale, is not bound in a legal manner to fulfil the sale, and this was deemed by the court of law in Partridge v Crittenden [1968] 2 All ER 421 case (Latimer, 2012). The contract formation has another crucial agreement component of acceptance. The acceptance denotes that the party, to which the offer was made, accepts the terms of the offer. The acceptance needs to reach the offering party in a clear manner and a silence on the offer made is not an acceptance as was seen in Felthouse v Bindley (1862) EWHC CP J35 (Stone &
CONTRACT3Devenney, 2017). It is important that the acceptance is properly told to the offer making party and is given on the offer which was made. In other words, if there is a change in the offer made, while the acceptance is being given, it is not considered as an acceptance and instead would be considered by the court as a counter offer. When such happens, the original offer expires as was held in Hyde v. Wrench (1840) 3 Beav 334 (Marson & Ferris, 2015). The third requirement for creating a binding contract is the consideration. It is important that the contract has an element of consideration and it needs to have an economic value in it for it to be valid (Latimer, 2012). The context of the particular case decides the economic value component. For instance, the three wrappers were deemed as valid consideration in Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87. Another important point about consideration is that it needs to be adequate and not sufficient, and has to move towards the promisor (Mulcahy, 2008). Clarity regarding the terms of the contract is another crucial element in contract formation as it helps in avoiding ambiguity from the contract. There is also a need for the contracting parties to give a free consent to the contract, without the presence of elements like duress, undue influence and the like (Lambiris & Griffin, 2016). The next component is that of capacity which denotes the need of the contracting parties to have the proper contracting capacityto enter into legal relations. This is in terms of the party being of sound mind and the parties having a legal age. The parties need to have the legal intention of creating lawful relations and need to know that by entering into the contract, they would be legally bound by it (Latimer, 2012).Question 2Contracts can be formed in both written and verbal manner and irrespective of the manner of formation of the contract, both have legal validity. In the written contracts, the terms on which the contract is being formed, is properly elaborated on a document, and the parties signthe contract. In a verbal contract, these very terms are verbally or orally exchanged, i.e., they are communicated in a manner of speaking. Thus, essentially, only the manner of documenting it differs, but both have legal validity in the eyes of law (Mau, 2010).
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