Contract Law: Essential Elements, Validity, and Dispute Resolution

This article discusses the essential elements of a valid contract, including offer, acceptance, consideration, capacity, and intention. It also explores the validity of contracts and the legal position of parties in a contract. Additionally, it covers dispute resolution methods, such as mediation and arbitration, and their advantages and disadvantages. The article provides case examples and relevant legal principles to illustrate the concepts discussed.

Running head: CONTRACT LAW 0
Commercial Law

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Introduction
A legal contract, constructed between two or more parties, binds them into a valid
agreement that can be enforced by the court. A valid contract requires fulfillment of various
essential elements which include, offer, acceptance, consideration, capacity, and intention
(Singapore Academy of Law, 2015). A legal contract can be written or oral; a written
contract is more beneficial since it is easier to enforce it through the court. The written
contract which is signed by the parties, act as an evidence which can be enforced by the
court.
The terms and conditions of a contract legally bind the parties to a contract to perform
or not perform any legal act. On noncompliance or non-fulfillment of the terms of contract,
the party can file a legal suit against defaulting party. The court can either provide a
judgement for enforcing the terms or provide monetary or non-monetary remedies against the
defaulting party. There are several other alternative dispute resolution methods which parties
can select instead of filling a lawsuit, such as meditation, negotiation, arbitration, and other
(Singapore Academy of Law, 2015).

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Answer 1
Issue
The issue in the given case is that whether a valid contract has established between
Alan and other three parties including, Bernard, Charleen, and Damian. Further, if a contract
has created then who are the contracting parties.
Rule
A contract creates several obligations and rights for the parties that are recognised and
legally enforced by the court. A valid contract requires fulfillment of various essential
elements, following is the essential elements of a contract:
 Offer: According to Guenter Treitel, an offer can be defined as the willingness to
enter into a contract which includes specific conditions that are made with an
intention for enforcement after the acceptance of another party; it can be written, oral
or through conduct (Treitel, 2002). The person to whom an offer to contract has made
is known as ‘Offeree’ and person making the offer called ‘Offeror’.
 Acceptance: According to Patrick S. Atiyah, acceptance occurs once a party give
his/her consent to the conditions or terms of a legal contract and provide a valuable
thing as a consideration to confirm the approval (Cane & Atiyah, 2013).
 Consideration: The value that is offered and accepted by the parties to perform or not
performance the terms of a contract is called consideration.
 Intention: A valid contract requires that parties must have the intention to bind
themselves by the terms of contract. The consent of parties must be free from external
threat or force.
 Capacity: It is necessary that parties of the contract are capable of entering into a
legal contract, for example, a minor, insolvent or mentally challenged person cannot
construct a valid contract.
Application
Alan posted on his Facebook page an advertisement to sell his book along with
handwritten notes; his Facebook friend Bernard saw the post and decided to buy the book.
Instead of accepting the terms of Alan’s offer, a counteroffer for $150 was provided by
Bernard. Alan rejected the counteroffer and provides that he will sell his book at $200, and he

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already has an offer at the similar price. After that, Bernard decided that he will buy the book
in $200 and he accepted the original offer of Alan. He sent his money through post which is
received by Alan on the morning of 5th November. According to the principle of law, a
counteroffer terminates an original offer. The Hyde and Wrench (1840) 49 ER 132 case is a
good example; in this case, the court held that after providing a counteroffer, a party cannot
accept the original offer; a counteroffer automatically terminates the original proposal (Graw,
2012). Bernard lost his right to accept the offer once he provided his counteroffer, the
original proposal ceases to exist; his decision to send money to Alan through post cannot be
considered as a valid acceptance. Therefore, Bernard and Alan did not have a valid
contractual relationship.
Charleen told her brother that she is interested in buying the book along with
handwritten notes after seeing the Facebook post. She was taking her GCE “O” level that
year, and she is still a minor. In Nash v Inman (1908) 2 KB 1 case, it was held that a minor
cannot enter into a legal contract, and he/she cannot be held liable for complying with an
agreement’s terms (Goodfellow, 2005). Therefore, Charleen and Alan did not enter into a
valid legal contract.
In case of Damian, he was interested in buying the book, and he immediately accepted
the offer of Alan by sending him an SMS. Damian stated that he is willing to pay the money
on 4th November, and Alan accepted to the condition. Thus, Damian and Alan have entered
into a valid legal contract.
Conclusion
In conclusion, Damian and Alan entered into a legal contract because both of them
fulfill the essential requirements of a valid contract. In case of Bernard, he provided a
counteroffer which terminated the original offer therefore no contractual relationship exist.
Charleen is not capable of entering into a legal agreement because she is still a minor.

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Answer 2
Issue
The issue is Bernard’s legal position and remedies against Alan.
Rule
A counteroffer terminates an original offer, and the offeree lost his/her right to accept
the original offer.
Application
Bernard decided to buy the book and handwritten notes after seeing the Facebook post
of Alan, but he provided a counteroffer for $150. Alan rejected such offer and stated that he
already has an offer for $200. Then, Bernard decided to purchase the book for $200, and he
sends money through the post. Alan received the money on 5th November and on 7th
November he gives his book to Bernard by saying that handwritten notes are written inside
the book. In Hyde v Wrench (1840) 49 ER 132 case, Wrench was selling his land for $1200,
and Hyde rejected the offer, then Wrench offers his land for $1000, and Hyde gives a
counteroffer for $950 (Bender & Do, 2014).
Wrench rejected Hyde’s counteroffer, and then Hyde decided to purchase the land for
$1000. Wrench rejected to sell his land and Hyde file a lawsuit against him for breach of
contract. The court held that a counteroffer automatically terminates the original offer and the
offeree lost his/her right to accept the original offer. The Dickinson v Dodds (1876) 2 Ch D
463 case provided similar judgement, in which the court held that nonacceptance of original
offer, terminates its existence (Gooley, Radan & Vickovich, 2007). In case of Bernard,
similar principles apply, and he did not have any legal rights against Alan. He cannot file a
suit against him for not providing him handwritten notes along with the book.
Conclusion
In conclusion, no legal contract constructed between Bernard and Alan, therefore,
Bernard did not have any legal right or remedy against Alan.

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Answer 3
Issue
The issue is Charleen’s legal position and remedies against Alan.
Rule
A minor, insolvent or mentally challenged person is not capable of entering into a
legal agreement.
Application
Charleen is still a minor therefore she cannot enter into a valid legal contract (Nash v
Inman, 1908). The court held in De Francesco v Barnum (1890) 45 Ch D 430 that a minor
can only enter into a legal contract which is created for his/her future benefits (Taylor, 2004).
There is no evidence that purchasing the book can be beneficial for Charleen in the future,
hence, it is a void agreement. As per Felthouse v Bindley (1862) 142 ER 1037 case, non-
rejection of an offer cannot be constituted as a valid acceptance, similarly, silence cannot be
considered as an approval (Austen-Baker, 2006). Alan on smiled at Charleen which is not a
valid method of acceptance. Therefore, Charleen did not have any remedies or legal rights
against Alan.
Conclusion
In conclusion, Charleen is a minor, and she cannot enter into a legal contract.

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Answer 4
Issue
The issue is Damian’s legal position and remedies against Alan.
Rule
Failure in compliance with terms of a legal contract construct a breach of contract,
and a lawsuit can be filed against defaulting party for enforcement or remedies.
Application
Damian accepted the offer of Alan, and he gave his acceptance through SMS; he also
provided that he wants to give him money on 4th November and Alan gave his approval.
Damian gives the money to Alan on Kaplan Higher Education’s campus, and Alan accepted
the money. Alan then purchases a new copy of the book and gives it to Damian along with
his handwritten notes. Like Redgrave v Hurd (1881) 20 Ch D 1 case, Alan gave a false
statement and misled Damian into a legal contract, and he did not fulfill his obligation by
giving his original book along with handwritten notes (Waddams, 2013). Therefore, Alan has
breached the terms of contract and Damian can file a lawsuit against him for collecting the
original book or collect his money back.
Conclusion
In conclusion, non-fulfillment of contract terms and misleading a party is considered
as a breach of contract and Damian has a right to file a lawsuit against Alan to receive his
money back or get the original book.

CONTRACT LAW 7
Answer 5
Identity
Dispute resolution includes various methods that parties of a contract can use to solve
the contractual dispute between them. The method of dispute resolution includes negotiation,
arbitration, mediation, collaborative law, and others (Goldberg, Sander, Rogers & Cole,
2014). The parties of a contract can file a lawsuit on breach of contract, or they can solve the
dispute through Alternative Dispute Resolution methods. The court encourages the use of
alternate solution in case of a contractual breach because it saves precious time of both
parties and the court. The parties can avoid the long and complicated process of litigation by
selecting suitable ADR method.
In meditation, the parties appoint a neutral third party called ‘mediator’ who guides
and facilities the parties to accept a mutual agreement. Instead of focusing on defaulting party
or condition of breach, mediator focus on finding middle ground for the parties of a contract
(Taylor, 2012). Another method of ADR is arbitration in which parties mutually agreed to
bring their dispute to an arbitrator who is a neutral third party. The arbitrator listens to both
sides and provides his judgement based on the principle of natural justice. The arbitrator’s
decision is legally binding upon the parties of a contract (State Court, 2017).
In Singapore, the arbitration facility is provided in Singapore International Arbitration
Centre. The Family justice courts and State court provide the services of mediation. The
Singapore Meditation Centre and Singapore International Centre provide the facility of
private mediation (McMullan, 2016). The Family Resolution Chambers and Child Focused
Resolution Centre are performing the activities of family-related disputes and solve them
through alternative dispute resolution.
Advantage
The advantage of arbitration and mediation method is that they both save a lot of time
and money of the parties. Usually, courts take a lot of time to give decision for particular
cases, and a lawyer and court fees also increase the expenses of the parties. The mediator and
arbitrator also listen to both parties side and establish a close connection with them which
assist in fair judgement (Goltsman, Horner, Pavlov & Squintani, 2009). These methods also

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provide the benefit of confidentiality to the parties because count’s transcripts are public
record and anyone can access them.
Disadvantage
The main disadvantage is that large and wealthy corporation take unfair advantage of
alternative dispute resolution methods to settle their disputes in private to avoid public
humiliation; they also use the money to influence the fairness of judgement. It is difficult for
parties to file an appeal against the order of arbitrator because he/she act as both judge and
jury. Many parties did not prefer to leave their faith in the hand of a third party (Koremenos,
2007). The cost of arbitrations and mediation is lower than court but in many cases the
situation is opposite, and parties have to pay high amount for alternate solutions than
compared to court proceedings.
Conclusion
In conclusion, there are several advantages of selecting ADR method along with
various disadvantages as well. But, it is modern method of dispute resolution that saves time
and money of the parties. Therefore, after analysing their situation, the parties should adopt
an appropriate ADR method. In case of Alan and Damian, they should adopt either mediation
or arbitration to resolve their dispute because it is faster and cheaper option.

CONTRACT LAW 9
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