Contract Law: Formation and Enforcement
Added on 2020-04-07
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Running head: CONTRACT LAW 0Business LawAssignment
CONTRACT LAW1Answer 1).There are several requirements which must be completed in order for a contract to be legally binding by the law. According to Treitel (2003), the provisions and regulations of England’s contract law have significantly influenced the law of contract in Australia. Following are the requirement necessary for the legally binding contract:Agreement: To establish an agreement between two parties it is necessary that there must be an offer and acceptance. As per Carter, Harland, and Lindgren (1996), an offer can include performance or non-performance of a specific activity and the person presenting the offer is known as ‘Offeror’. Other parties who are known as ‘Offeree’ must accept such offer without altering or introducing new terms in the agreement. It is necessary that parties of the contract must not change or alter its conditions, or else the agreement cannot be established. The condition or task of an offer must be legal, in case an agreement is conducted for illegal activities than such agreement willbe void ab initio.Intention: As per Peden (2011), intention means motive or will of the parties for entering into a contract. It is necessary that both the parties to the contract must have asimilar intention for entering in the contract. If the parties sign a contract but both of them have separate intentions, then such contract will be void. The intention of the parties to a contract must be acquired by without using any force or illegal activity. Consideration: It is the payment made by one party in lieu of the promise made by another party in a legal contract. Smith and Atiyah (2006) provided that the consideration provided in a legal contract must have certain worth and it must be legal. Without a valid consideration, a contract cannot be established in-between two parties. The consideration of a contract must have monetary value and the worth must be certain and fix, for it to be valid.Capability: While entering into a legally binding contract, it is necessary that parties of the contract must understand its terms and capable to enter into such contract. According to Paterson (2009), the parties must be of legal age to enter into a legal contract, in Australia, the parties must be 18 years old or above. The parties must be sound minded meaning they easily understand the condition of contract and know its
CONTRACT LAW2legal implications. Another requirement is that none of the party of the contract must be declared insolvent by the court. Certainty: The conditions or the terms of the legal contract must be contained and fixed. According to Carter and Peden (2003), the terms cannot be changed by the will of any party; to change such terms, permission of both parties must be necessary. If any party added or removed any terms form the contract, another party shall not be legally binding to perform such activities.Answer 2).To bind a contract upon parties, it is not essential that such contract must be written. The validity of a contract is depending upon various factors, for example, there must be an offer and acceptance. The offer provided by offeror must be accepted by offeree without change or alteration in the terms of agreement. As per Governatori and Milosevic (2006), a valid and legal consideration must be available in the contract which has certain monetary value. The intention for the acceptance of contract’s term must is acquired without any illegal force. The parties of the contract must not be minor, insolvent or unsound minded. The term prescribed in the legal contract must be fixed. After complying with above provisions, a contract can be legal in any form, either oral or written. The legal status of both contracts is similar in the eyes of law and both of them are legally binding upon the parties to contract. The parties of a contract can decide the format according to their requirements. But, in case of an oral contract, it became difficult for parties to enforce its terms when there is no witnessavailable while the contract was established. Arrighetti, Bachmann, and Deakin (1997) provided that if there is no witness available, the parties of contract can deny its conditions orprovided new conditions which were not available in original contract. It is difficult for parties to provide the evidence for the effectiveness of a legal contract. Another problem of an oral contract is that if a long time has passed since the contract took place, then the parties of such contract started to forget its terms. Without a witness or proper evidence, it is significantly difficult for the court to enforce the terms of contract over the parties. The status of oral or written contract is similar in law but there are many difficulties faced by parties while executing the oral contract conditions. There is a high chance of vagueness in the condition of a contract when it is performed orally by the parties (Appleman, Appleman and Holmes 2016).
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