Requirements of Binding Contract Assignment
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Added on 2020-04-01
Requirements of Binding Contract Assignment
Added on 2020-04-01
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RUNNING HEAD: BUSINESS LAW ASSIGNMENT1Business law assignmentSubmitted by:
Business Law Assignment2Ans to Q1Components required for demonstrating that a binding contract exists:There are 5 components required to demonstrate that a binding contract exists. These elements are important to form a legal relationship in between the parties to the contract. A contract is a voluntary association between two or more people enforceable by law through a binding lawful process. Contractual relationship in between the parties arises due to mutually agreed terms and conditions (Helewitz, 2006). Offer and Acceptance: In order to form a valid contract there should be a valid offer and acceptance. It is important to make a binding relationship in between the parties. As stated in Carlil vs. Carbolic Smoke ball, an offer is said to be valid if the promisor is serious for carrying the promise based on the terms and conditions (Kramer, 2010).Intention: the purpose of a contract is to form legal relationship in between the parties. A contract cannot take place without a lawful intention. Gratuitous agreements do not forma legal relationship hence doesn’t come under the purview of contract. In Balfour v Balfour, It was held that there is a rebuttable conjecture adjacent to an intention to create a legally enforceable agreement of domestic nature. Therefore it is mandatory to check the intention of both the parties before forming a contractual relationship (Miller and Jentz, 2009). Lawful consideration: A valid contract includes a lawful consideration to give a positive effect. A contract without a lawful consideration is not valid. A consideration need to be adequate enough to give an effect to the contract as stated in Chappell & Co Ltd v Nestle Co Ltd(Mulcahy and Tillotson,2004). Capacity: Both the parties forming a contract should be legally competent enough to form a legal relationship. There are pre-conditions that govern the contract made by the minor, an unsound person or one who is drunk at the time of formation of contract. Any of the party incompetent to form a contract is not a valid contract. A party suffering with mental disorder is not competent to get into a contract as stated in Gibbons v Wright. Such a contract has a right to be ratified (Mulcahy, 2008).
Business Law Assignment3Free consent: A contract should be based on mutual consent between the parties. This is one of the essential parts of a contract. A valid contract should be free from any external force. A contract formed due to any external pressure is invalid in law as stated under Barton v Armstrong.These components depicts that a valid contract does exist and is enforceable by law. In absence of any one of the component, the contract is invalid (Baker, 2011). Ans to Q2)No, it is not necessary that a contract should be in writing to check its enforceability. Verbal agreement and oral contract are valid and legally binding as long as they are reasonable, equitable, and conscionable and made in a good faith. The only reason is questionable due to thedifficulty in enforcement. Written contract can easily be enforced in the court. They can easily bepresented as evidence in court, whereas, it is difficult to dispel the defects in contracts when it is not in writing. It is difficult to prove the facts in the court in absence of a valid contract. Any party to the contract can lie about the terms in the agreement. However there are few contracts that do not required to be written. Implied contracts are the one that does not required being in writing. The transaction is an implicit contract where the goods are sold at a price marked on it (Baskind ET al.2016).Texaco vs. Pennzoil caseSamuel Goldwyn stated that, "An oral contract is valid as a written contract. Further it was statedthat the vast majority of dealings between individuals and people, are, in fact, oral in nature. As per the decided case law the oral contract have the same reciprocation as the written contract andare valid before the court (Bolton and Dewatripont, 2005). It is recommended to undergo a written contract to surpass the flaws in the verbal contract. It is advisable to "get a contract in writing" to assure both parties recognize their obligations. In case of breach of such contract it is important to gain clarity regarding the act. A written contract can easily be enforced in the court of law. Moreover the parties' to the contract are aware about their rights and avoid dispute. The breach of contract lawsuits can be expensive to the business, so it isimportant to get a contract in writing. This will help both the parties to be aware about their
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