Corporation and Business Law

This document discusses the validity of a contract between Charlie Martin and his younger sibling and the promise made by Nell Madison to give Charlie Martin extra time to pay overdue accounts. It explains the rules and applications of valid contracts and considerations. The conclusion is drawn based on the analysis of the rules and applications.

Running head: CORPORATION AND BUSINESS LAW
Corporation and Business Law
Name of the Student
Name of the University
Author Note

1CORPORATION AND BUSINESS LAW
Issue 1
Whether there is a valid contract between Charlie Martin and his younger sibling.
Rule
A contract to be valid must be accompanied by an offer and an acceptance forming an
agreement. The contract must be arrived at by the free consent of both the parties to the
contract. The contract bring some consideration to both the parties. The terms of the contract
must be legal and fair. The contract must create a legal relationship between the parties
(McKendrick & Liu, 2015).
A valid contract once entered into cannot be repudiated by either of the party involved
in the contract. A contract, which is not valid, the agreement collateral to it is also not valid.
Application
In this case, Charlie offered to enter into an agreement with his younger sibling to
contribute $50,000 and in return he promised to give his sibling a 10% ownership in his
business. His sibling accepted the contract. The contract contains a proper offer with an
acceptance of the same forming an agreement. A free consent of both the parties has been
obtained in this situation. There is a consideration for both the parties accrued by way of this
contract. In this case, $50,000 is the consideration towards ten percent ownership. The
contract was entered into to create legal relations. The contract has all the essential elements
of a valid contract. Hence, this is a valid contract.
Conclusion
There is a valid contract between Charlie Martin and his younger sibling.

2CORPORATION AND BUSINESS LAW
Issue 2
The way in which the court will view the promise by Nell Madison (PHOCCI) to give
Charlie Martin “extra time” to pay the overdue accounts.
Rule
A valid contract must be instituted by an offer and the acceptance of that offer
forming an agreement. The agreement must be entered into for a consideration to both the
parties to the contract (Hunter, 2017). Consideration is an essential element of a valid
contract. The adequacy of consideration is not relevant, the presence of the same is important.
Consideration must be present for both the parties, as a contract must yield benefits to both
the parties. A contract without a consideration is void.
Application
This agreement providing Charlie Martin with an extra time does not provide for a
consideration towards Nell Madison for extending time for payment of royalty to Charlie
Martin. This lack of consideration fails to satisfy the element of a valid contract relating to
the consideration of a contract. This would not make a valid contract owing to the lack of
consideration.
Conclusion
In the opinion of the court, the promise will be an agreement and will not attain the
status of a valid contract. The agreement will not be binding upon the parties and will fail to
create any legal obligations. This will not create any rights to the parties to enforce the
contract or any remedy if the promise is violated by any of the parties. No claim for damages
will arise in case of breach of the agreement constituted by this promise.

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Reference
Hunter, H. (2017). Modern Law of Contracts.
McKendrick, E., & Liu, Q. (2015). Contract Law: Australian Edition. Macmillan
International Higher Education.