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Contracts and Agreements Small Business

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Added on  2020-02-24

Contracts and Agreements Small Business

   Added on 2020-02-24

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Business Law 1BUSINESS LAW[Author Name(s)]The Name of the Class Professor Institution The Date
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Business Law 2Question 1List and explain briefly each of the components required to demonstrate that a binding contract exists.An agreement might be binding or nonbinding. For an agreement to attain a legal force, itmust meet the prerequisites of a contract. Corbin (2017) gives offer and acceptance as one of these components. In his work (Corbin, 2017) states that an agreement would require one party known as the offeror to make an offer. Then the other party called the offeree to accept the offer. Both the offer and the acceptance also have their terms. That is, on the side of the offeror, there should be clear intention to make the offer, while on the side of the offeree there must be clear intention to accept the offer (Frey, 2015). The other term is that the offer’s conditions should be clear and certain (Corbin, 2017). Lastly, the offeror should communicate the offer to the offeree. Also, the same terms exist on the side of the acceptance, but for an addition, the acceptance should be unequivocal. The other component is that there should be a manifested intent to create a legal relation (Saprai, 2017). In other words, the parties should demonstrate that they intend to have a legally binding agreement (Gulati, 2011). The court tests the parties' legal intention using an objective standard. Mainly, the court will look in a reasonable man’s perspective to justify whether the parties planned to create a legally binding agreement (Gulati, 2011). The other component is a consideration (Poole, 2016). This one is a requirement that there should be something for exchange from one party to the other (Poole, 2016). Notably, consideration should have a legal purpose. The other element of a contract is the contractual capacity. As explained by (Varney, 2017), contractual capacity refers to the legal ability of the parties to form a contract. In most cases, capacity means a person’s ability to undertake legally valid choices, ability to obtain legal
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Business Law 3rights to choices, and the ability to incur legal liabilities for such choices (Schuhmann and Eichhorn, 2017). In general, the law considers intoxicated persons, minors, and the mentally disabled persons as lacking the limited capacity to enter into a contract. A good example is a caseof (Fawcett v. Smethurst, [1914]). In this case, a minor made a contract to hire a car. One of the contractual terms was that the minor would be liable for all the damages without a regard that they resulted from the minor’s faults or not. Nevertheless, the court dismissed the contract. The reasoning was that even though the car was a necessity to the minor, creating liabilities for the minor to all the damages was too onerous.Another component of a contract is the legality. This one requires that the aim of the contract to be for valid reasons (Miller, 2017). The entire subject matter must be legitimate. The work of (Poole, 2016) affirms that if the contract is illegal or it violates the state, federal or common laws, the court will dismiss it. The best term for this one is an "illegal bargain, " or an "illegal agreement" since the term contract refers to an enforceable agreement.Question 2Does a contract have to be in writing to be binding? In your answer explain whether this is the case, and further whether it is a good idea to put an agreement in writing.No, the contract doesn’t have to be in writing so that it can become binding on the parties(Poole, 2016). In most cases, people use the word contract when they want to mean written papers that express the parties’ agreement. Given that, it is essential to note that a “contract" means a legal relationship that could be either recorded or unrecorded. Also, Gibson and Fraser (2015) states that no law that demands the parties to make a written contract so that it can become binding or legally enforceable. However, some contracts must be in writing as required by the Statute of Frauds (Gibson and Fraser, 2015). Despite that, the statute of frauds does not cover most of the contracts. So as soon as parties reach an oral agreement, the agreement
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