The Primary Function of the Law of Contract
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Added on 2020-04-01
The Primary Function of the Law of Contract
Added on 2020-04-01
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Business Law 1BUSINESS LAW[Author Name(s)]The Name of the Class Professor Institution The Date
Business Law 2Question 1List and explain briefly each of the components required to demonstrate that a binding contract exists.The primary function of the law of contract is to oversee people’s promises. These promises can be legally binding to the makers, or they can be non-binding. For an agreement to be binding, the law checks for specific elements. Element 1: OfferContracts start with one person proposing a transaction or an offer. One rule of an offer states that its terms must be straightforward or clear(Furmston, Tolhurst and Mik, 2010). For instance, in (Guthing v Lynn, 1831) The claimant terms for buying the horse required the horse to be lucky. The court found no meaning by the term lucky. The second rule requires the offeror to communicate the offer to the offeree. This communication can be oral, written, or conduct. Element 2: AcceptanceAfter an offer, a valid agreement must have an acceptance. The rules of acceptance state that it should be unconditional to any of the terms given by the offeror. Secondly, the offeree should communicate the acceptance to the offeror. Like an offer, acceptance may take a written form, an oral or conduct(Klass, 2010). An acceptance by conduct happens when the offeree starts performing according to the terms without giving a written or a verbal acceptance. For example, in (Brogden v Metropolitan Railway Company,1877), The defendant sent the claimant a draft of the contract. The claimant made some changes, signed, and then sent it back. The defendant filed the draft, and the parties continued with the trade. When a dispute arose, the claimant relied on his counter-offer to discharge the claim. The court stated that as far as the parties’ conduct matched the contract terms, the contract was enforceable.
Business Law 3Element 3: ConsiderationConsideration is another requirement for a binding contract. In English law, gratuitous promises are not binding to the parties apart from those made under deed (Miller and Jentz, 2010). The law demands that A party to a contract must give something valuable to the other as an exchange with another thing. A definition of consideration was given in (Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd, 1915), as the value that one party surrenders to receive or acquire a promise or an action from the other party. Element 4: Intention to Create Legal RelationAn agreement also requires the intention of the parties to abide by the terms. A dispute asto the intention requires the court to refer to the agreement in an objective approach (Gulati, 2011). That is, interpreting the agreement in a reasonable man’s position. Also, the court puts theagreement into either of the two categories. Agreement arising from a commercial context, and those coming from domestic or social context (Gulati, 2011). The law assumes domestic or social agreements have no intention. However, the court finds the intention in the situations where the agreement involves issues of money. Element 5: CapacityThere are some people that the law will discard their contract due to lack of contractual capacity. These are drunk people, mentally disordered persons, minors and corporations(Goldman and Sigismond, 2011). Minors are people under the age of 18, though the law allows them to enter into a contract of necessity. For instance, in (Fawcett v Smethurst, 1914). A minor entered into a contract to hire a car. The minor consented to all the damages including those not made by him. When the dispute arose, the court did find that the car was necessary, but the term for all liabilities could not apply.
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