Report on Contract Formation and Its Operating

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INTRODUCTIONExpanding boundaries of business units and complex business scenarios are demandingeffective knowledge of legal complications within the economy. Contracts and contractualliabilities are some of the basic legal knowledge which helps the business units in enhancinggrowth measures efficiently (Cartwright, 2011). Formation and operations of business contractshelps an individual in working and operating business in an effective measure. Current reportprovides a deep insight about contract formation and its operating within the business unit. Itdiscusses about the obligations and relationship associated with contract and negligence inbusiness.1.1Contract is a legal document which binds the parties associated with it, in contractualobligation. It is defined as a lawful agreement between more that one party which binds theminto contractual obligations of performance of the contract. Converting agreement into a contractdemands few essential elements which are discussed henceforth.Offer: This is the expression of willingness to develop a contract on the basis of specificterms and conditions with another party(s). The offer is a clear representation ofwillingness of one party to the other. The offeror represents his/her offer to the offereewith the intension to develop a contractual obligations as per the mentioned terms andconditions (Gray, 2010). If the offeree modified the terms and conditions of the offer itnullifies the previous contract and is termed as a counter offer.Acceptance: This is the expression of consent by the parties for the specific terms andconditions of the contract. This helps the business unit in creating an effective impact oncontractual liabilities of the terms and conditions of contract (Howells, 2011). Theacceptance of the offer is suppose to be in the given time frame because revocation ofoffer nullifies the initial offer however if the offer is revoked after the implied acceptanceof the party, the offer becomes void.Intension to create legal relation: This is a very significant element of valid contract. Itstates that the parties involved in the contract must have a intension to develop legalagreement. The contract developed for conditions which are not legally appropriatenullifies the contract. Moreover the parties involved in the contract must have a free will1
to enter into the contract and that no external force or persuasion must be applied forthem to develop the contractual obligation (Koffman and Macdonald, 2010). For exampleif A pressurizes B to sign a doctrine of contract to sale a valuable antique then the courtof law will nullify the contract if B is able to prove that contract lacked the element ofintension.Consideration: This is one of the most significant element of the contract. According tothis the parties involved in the contract are accustomed to gain something of value inreturn while developing a contract (Rosen and, 2009.). For example if party A and bdevelops a contract for sale of good then seller will gain money or exchange value andbuyer will gain the product as a consideration thus this is a very important concept ofcontractual obligation.Case referenceAs per the given case James advertised a web camera for sale on a e-commerce site for55. Maria responded for the email by showing her willingness to buy the product at₤ 45. Jamesdid not accepted it however due to lack of any other offers James was ready to accept Maria' sprice thus he wrote Maria showing his willingness.Application of Legal provisionsAs per the given case the contractual obligations which are attained for the parties are:Offer: As per the case James offered the web camera at ₤55 on e-commerce site. Mariagave a counter offer for the same to James expressing her willingness to buy the productat45.Acceptance:On the basis of mentioned case Maria sis not accept James offer rather shegave a counter offer for the same. James due to lack of rightful buyer ultimately acceptedMaria's counter offer as per her terms. Thus this clearly reflects acceptance of offer.Intention: The contractual obligations for the given case represents that the buyer andseller has the rightful and legal intentions to develop the contractual obligation.Consideration: The consideration for the above case will be web camera for Maria and₤45 for James.Thus as per the above explanation the parties of the contract attained all the essentialelements of the contract thus the contract is considered to valid and effective.2
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