Contracts and Agency Relationships
Added on 2020-04-07
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Running head: CONTRACTS 0Business Law
CONTRACTS1Answer 1.England’s contract law has significantly influenced the principles of Australian contract law; most of the regulations are similar in both laws. As per Treitel (2003), the crucial aspectsof a binding contract are similar in both countries’ contract laws. Following are the essential requirement for a contract to legally bind a person:1.Agreement: According to McKendrick (2014), the first condition for a contract to be legally binding under the law is an agreement between the parties of the contract. An agreement is created after an offer is made by one party which is accepted by another party. The offer of a party includes performance or non-performance of a particular task, which must be accepted by another party. The offeror is the person who makes an offer to another party, and the party who accepts or denies such offer is called offeree. The offer made by offeror must be for performance or non-performance of a lawful act. The offer must be accepted by offeree without any pressure or threat. Afterthe acceptance of such offer, an agreement comes into existence. 2.Consideration: Every legal contract required a lawful consideration to bind it upon the parties of the contract. A consideration can include anything which is given in lieuof a promise to perform or non-performance of certain activities. An agreement cannot be formed without a legal consideration. As per Carter, Harland & Lindgren (1996), the consideration is an essential requirement for legal binding of a contract. Usually, the consideration for a contract can include money or anything which has a monetary value. It is necessary that consideration has a certain value, without a worth the consideration cannot be legal. 3.Capacity: The capacity or capability of the parties is necessary while entering into a legally binding contract. According to Bruce (2014), an incapable person cannot enterinto a legal contract; any contract without the capacity of parties shall be considered as void ab initio. It is necessary that the person entering into the contract must be able to understand its legal consequences and then give his approval. A party of the legal contract must be above the proper age provided under the law that is 18 years. the person must have a sound mind to understand right or wrong for himself. It is also necessary that the person must not be insolvent.4.Intention: The intention of both parties to contract must be similar and clear from anyinfluences. As per Brownsword (2000), it is one of the most important requirements
CONTRACTS2of a legal contract to enforce the terms of the contract upon the parties to such contract. 5.Certainty: The terms of a legal contract must be fixed in order to make it legally binding upon the parties. The ambiguous or unclear terms of the contract cannot be legally binding upon the parties of contract (Applebey, 2001). Answer 2.In order to enforce a legal contract, it is not necessary that the contract must be in written form. A contract can be legally binding if certain conditions get fulfilled such as theremust be an offer and such offer must be accepted by another party without any new terms or conditions. The parties of the contract are capable to enter into a legal contract and there mustbe a legal consideration available for performance or non-performance of certain tasks. Both parties must have a similar intention of legally entering into the contract and the terms of the contract must be fixed. As per Solan (2001), a legal contract can either be written or oral, as per the requirements of the parties. Both contracts, either oral or written is equally enforceable under the law; the court did not distinguish upon the format of a legal contract, except for formal contract. The oral contracts are tough to enforce due to lack of evidence for proving their legitimacy. The parties of an oral contract can get into an argument regarding the terms of the contract. Due to the lack of evidence, it is tough for the court to force terms of the contract upon parties. This is a significant drawback for parties while entering into an oral contract. While ascertaining the legitimacy of oral contract, the court analyses different pieces of evidence provided by both parties to support their claim, therefore, eventually, the terms of an oral contract can change according to the order of the court. As per the written contract, the terms cannot be changed by the parties without the approval of another party since the terms are written. The court can easily bind parties upon the terms of a written agreement. The parties of a contract can avoid any vagueness in the terms of contract if the terms are written properly in a contract (Nolo 2006). A written agreement is better than oral agreement since, in a long period of time, the parties of contract can forget about the terms of the contract, therefore, written contract ensures the proper implementation of contract terms. A written contract has several benefits over an oral contact, such as a written contract reduces the chances of conflicts at the time of enforcement of the contract. In case of daily business activities, such as selling or providing
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