Contracts and their implication

INTRODUCTION TO CONTRACT
LAW

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Discussing elements of contracts and their implication.........................................................1
TASK 2............................................................................................................................................3
1. Identification of expressed and implied terms of contract.................................................3
2. Implication of exclusion clause..........................................................................................4
TASK 3 ...........................................................................................................................................5
1. Ways in which a valid contract can be discharged.............................................................5
2. Remedies available in case of breach of contract...............................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
A contract is a written agreement between two or more parties, which is
enforceable by law. A contract can be oral but it does not have any legal binding effect. The
written agreement can be entered for sale, lease, tenancy, employments etc. Legal implication
provides rights and duties to parties related with it. With legal binding effect of contact through
Contract-law, parties are bound to perform activity specified in agreement. The law also provides
remedies to parties in case another party refuses to perform its obligation. In present report,
element of a valid-contract is presented along with their implication on case laws. Implied and
express terms in contract law are discussed. Report also presents manners in which it can be
discharged and remedies available in case of breach of contract.
TASK 1
Discussing elements of contracts and their implication
Constitution of a contract: This is a written agreement, which lays down obligations
recognised and enforceable through law. According to common law, a valid contract has
generally three content: - (I) agreement, (II) contractual intention and (III) consideration. For a
contract, main requirement is that concerned parties must reach to an agreement. A party makes
an offer which is accepted by another party to check whether parties have reached to an
agreement or not and for this, court may apply an objective test.
Four main elements of a valid-contract:
A. Offer: An offer can be defined as an expression of willingness to enter into a contract
on certain specified mutual terms. The intention of making an offer is that once an offer is
accepted by party to whom it is addressed as it will create a legal binding effect on such party.
An offer shall be made by offerer with an objective and a purpose that he/she will be bound, if
offer is accepted by other party (Giliker, 2017). Therefore, an offerer can get bound if his/her
words expressly induce other party to believe that an offer is made with an intention of getting
bound. With this, it can be clearly stated that an offer shall be made with a purpose of getting
into an agreement with other party. A conduct of party can also influence or induce other party
when an offer was made to them.
An offer can be made in the written form or by orally conducting it. It can be addressed
to a single individual, to a particular group of people or to the society as a whole e.g.- a reward
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assured for finding a lost pet. An invitation to a party can also be considered as an offer but it is
distinct from an offer in contract because intention of party is important. In case of a party
invitation, this cannot be considered as a valid offer intention that does not enter into a contract.
B. Acceptance: it can be expressed as final and unconditional assent in terms of offer by
party to whom offer is made. Recipient of offers must have an intention to be bound by terms of
offer once accepted (Twigg-Flesner, 2015). An offer shall be accepted with its explicit terms
only without any modification for purpose of entering into an agreement. Terms in an agreement
shall precisely match with terms in offer and all of them must be accepted as it is. This means in
acceptance of an offer, all terms mentioned in it must be agreed upon without any alteration.
Another important aspect of acceptance is that it must be communicated to offerer that an
assent is given to offer. An offer can be revoked at any time before communication of acceptance
by other party. With acceptance of offer parties have an agreement, which is a base for formation
of a contract. An agreement between parties do no create legal obligation.
C. Consideration: An agreement or a promise will not have a binding effect unless there
is a consideration. A consideration means something of value in return that is given for a promise
and make a contract legally enforceable. Considerations shall be sufficient but it might not be
adequate e.g. for a sale of house, and the amount paid by the party for buying house shall be
sufficient with relevance to market price of house (Lievens, 2017). The consideration must move
for promise made by offer and acceptance. The movement of consideration must be from
promisee/accepter but it is not necessary that it shall move to promisor /offerer. It can move to
the third party on the behalf of promisor. With considerations, an agreement finds the base for a
contact with a scope of its legal enforceability.
D. Contractual intention: An agreement with a consideration will not attain legality
unless it is entered with a purpose of creating legal obligations by law. The parties must have an
intention for making their agreement legally binding. In case of commercial transaction, it is pre
assumed that parties have an intention of creating legal enforceability. An agreement created as
“subject to contract or “letter of comfort” is not enforceable by law. The parties are not bound
until a formal contract is exchanged between parties and a legal enforceability is created.
Therefore, an invitation to a party is not a valid contract as it has an offer and acceptance which
may or may not include considerations but it certainly does not have an intention of creating
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