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Report On Elements Of A Valid Contract

   

Added on  2020-02-03

13 Pages4722 Words135 Views
UNIT 5 - ASPECTS OFCONTRACT

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1LO 1.................................................................................................................................................11.1 Importance of the essential elements required for the formation of a valid contract............11.2 & M1 Impact of different types of contract...........................................................................21.3 & M2 Terms in contracts with reference to their meaning and effect...................................3LO 2.................................................................................................................................................42.1 & D1 Applying the elements as per case...............................................................................42.2 & M2 Applying the law on terms in different contracts........................................................52.3 & D1 Effect of different terms of law...................................................................................5LO 3.................................................................................................................................................63.1 Contrasting liability in tort with contractual liability............................................................63.2 & M1 Nature of liability in Negligence.................................................................................73.3 & M3 Way in which a business can be vicariously liable.....................................................7LO 4.................................................................................................................................................74.1 & D2 Applying the elements of tort of negligence and defences in different businesssituations......................................................................................................................................74.2 & D3 Applying the elements of vicarious liability in given business situations...................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONIn any kind of business, to run it in a smooth manner, it is important to apply specificrules, principles, norms as well as usages of contract. In the present scenario, there is hardly anybusiness which is not dealing with the purview of contract as to have a legal presence in themarket, it is highly significant. Contract is a voluntary agreement formed in between the two ormore parties. It is a legal binding agreement which is enforceable by law (Johnson, 2015). In thepresent report, there will be discussion on essential elements of a valid contract in a businesscontext. Along with that, as per the given case scenarios, the elements of a contract in businesssituations will be applied. In addition to this, laws on terms will be applied consisting ofcondition, warranty and innominate term along with assessing the effect of different terms oflaw. Further, principles of liability in negligence in business activities will be studied as well asapplied with respect to the given cases.LO 11.1 Importance of the essential elements required for the formation of a valid contractTo form a valid contract, it is highly important that all essential elements will be presentas absence of any one of them will be considered as a barrier to make a contract valid. To be acontract, at first, it must be an agreement that should be enforceable by law as well as its objectmust also be lawful. The elements that are essentially required for the formation of a validcontract are stated as below: Offer and acceptance - Further, it is significant that to form a valid contract, there will bethe proposal, that is, offer and acceptance. Offer is the willingness of a party to takeconsent of another and acceptance is when the other person agrees with the givenproposal (Kodilinye, 2014). It can be said that life of an agreement starts with an offeronly which later take the shape of a legally binding contract when it is accepted byanother party to whom the offer has been given. Competency of the parties – In a contract, everyone cannot enter as only the people withage of maturity and sound mind are with permission by law for the same. Also, those whohave not been disqualified from the contracting by any law can enter into the contract. Onthe other hand, those who are minor, that is, below the age of 18 years or of unsound1

mind are not considered as competent parties as well as people who are disqualified byany law cannot enter into the contract (Ghafar, Ismail and Tohirin, 2010). Free consent - In addition to this, it is necessary that both the parties will have freeconsent. It is one of the most essential elements to a valid contract. Under free consent,offer must be communicated to the other party which must be understood by another inthe same manner the offerer wants offeree to comprehend. It can be said that the samething must be understood in the same sense which offerer wants to convey to the offeree. Consideration - Apart from that, contract also requires a lawful consideration in betweenparties so as to make it valid in the eyes of law (Herijanto, 2016). It means that there mustbe sufferings for the offer made, that is, something of value that is given in return by theafferee to offerer for the proposal he/she has made.Lawful object – In order to form a valid contract, it is significant that object and theconsideration must be lawful in the agreement which means that it must not be forbiddenby law. Along with this, if it is fraudulent or of nature that it may defeat the provisions oflaw, it cannot be considered as lawful. In addition to this, if consideration and object areagainst the public policy or welfare, then also, these will be taken as unlawful and so,valid contract cannot be formed (Tiganescu, 2013). Enforceability in law – If all the elements will be present in an agreement, then too, itwill not be considered as a valid contract of it is not enforceable by law. It includessituations like impossibility of performance because of the nature of agreement or if tradeof any person gets unduly restrain, then a valid contract cannot be formed. Therefore, tofulfil all legal requirements is crucial for a valid contract as absence of same may lead itto be a void agreement which is unenforceable by law (Burnham, 2014).1.2 & M1 Impact of different types of contractVarious types of contracts are there that have their distinct impacts while formatting ofmaking a contract valid. The contracts and their impacts are mentioned as below:Expressed and implied contract – As per the expressed term, if an offer or acceptance ismade in words, it can be termed as an express one. These terms can either be in oral orin written form. On the other hand, when such offer and acceptance is made and if there2

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