Business Law and Ethics: Formation of Contract and Rights and Responsibilities

Business Law and
Ethics

INTRODUCTION
Business law in any country plays very important role in running of business and its
activities. There are many laws which are associated with business law. They are: partnership
law, company law, contract law, insurance laws, negotiable instrument laws, etc. all these laws
help support business and its activities either directly or indirectly. Nature of business defines the
laws that are to be followed by them. All business activities requires to contract with other
parties even for small requirement. Contract is the essential of any business (Goldberger, 2019).
Contract law builds the contractual relationships between the parties to the contract. This report
consist of a case scenario where an offer was rejected and later was accepted. This report also
explains the essentials of forming a contract and rights and duties of parties under contract.
MAIN BODY
Case scenario
Angharad is a business person who has a business of buildings. She posted an
advertisement in the local print and online media for the services they render. Bridie upon
looking at the advertisement contacted Angharad to built a wall in her garden and along with it
she also specifies description and planning of the said wall. Angharad responded her with a quote
of £500 in writing with a time clause which says that the offer is valid only for 10 days and later
any quotation will not be accepted. Within 10 days duration Bridie contacted Angharad through
e-mail stating that she is not accepting the quotation. After few days on having second thought
she emailed back to Angharad that she is accepting the quotation. Again Angharad emailed back
to her stating the new quotation which would be £600.
what is a contract?
A contract is an agreement where parties makes promise with each other and such a
promise have an enforceability of law. It is not important for a contract to be in writing, it can be
orally made between the parties. The contract to be valid and legal shall fulfil the four essentials
which are required to make it valid, binding and enforceable by the law. The four required
essentials are offer, acceptance, intention to create legal relationship and consideration (Cafaggi
and Iamiceli, 2020). Once all the essential conditions are fulfilled it is considered as a valid
contract. Contract are of many types and the terms and conditions mentioned in the contract are
generally divided in two parts i.e. express terms and implied terms. In a contract the terms can

be expressly made in the contract mutually by the parties. There are few terms to the contract
that are not written or mentioned in the contract but are implied to the parties. The valid
formation of contract gives binding effect and law enforceability upon the parties to which they
are obliged with. The terms mentioned in the contract therefore cannot be breached by the
parties. Breach of contract results in parties paying damages and compensation to the innocent
parties (Cote, 2019). There are ways in which contracts are terminated, when they have any
expiry date mentioned in the terms. In that case the contract is not said to be breached by the
parties. A contract can also be terminated if it gets impossible for the party to carry out its terms.
Misrepresentation of the contract also leads to the end of contract if the facts of the contracts are
unclear to the parties.
What are the essential conditions of forming a contract?
Forming a valid contract is very important under the law of contract. A valid contract
creates a binding effect on the parties and makes it enforceable by the law. It is therefore
important that the contract fulfils all the essential conditions of a valid contract to make it
binding and enforceable by law. There are four essentials which are needed to be fulfilled. They
are: Offer: It is the first essential which is required to be fulfilled to start formation of a
contract. An offer is made by one party to another for it to be accepted. Acceptance: It is the second essential of forming a valid contract. It is the acceptance of
offer after the offer is made by the party. If the other party rejects the offer, it is
considered as revoked. But, If the offer is accepted by the party it forms an agreement
between the parties. Intention to create legal relations: It is the third essential of forming a valid contract.
The contracting parties must have an intention to create legal relationship with each
other. The parties must have clear intention to form contract (Mills and Saprai, 2019) .
The intention must not be the result of force or any kind of influence from any other
party.
 Consideration: It is the fourth and the last essential which is very important to be
fulfilled in order to complete the formation of a contract. Consideration means some
amount or money which is of value.