Essential Elements of a Valid Contract and Contractual Issues

Business Law 1
Business law

Business Law 2
Answer 1
Contract is the agreement between the two parties, and terms of agreement affects the rights and
obligations of both the parties. There are numbers of elements, which determine whether valid
contract exist between the parties or not. In case any single element is not present then such
agreement is not considers as valid contract between the parties. Following are the essential
elements of the valid contract:
Offer: Offer is determine as the promise or expression of willingness given by the offeror in
context of bound on particular terms after receiving the acceptance from the person to whom
such offer is directed. Offer can make in any form such as in written form or oral. It is necessary
for the person to understand the difference between the offer and invitation to deal. As invitation
to deals result in the further negotiation between the parties, but acceptance of offer results in the
binding contract between the parties (SAL, n.d.).
It must be note that offer can be terminated by the offeror at any time before the acceptance of
the offeree.
Acceptance: another important element of the valid contract is the acceptance, which means
acceptance is the unequivocal statement that is give in context of accepting the offer given by the
offeror. Acceptance is effective only when it is properly communicate to the offeror and it must
give by the person to whom offer is made and not by any other person. Following are the
essential elements of the acceptance:
 Acceptance must be communicates to the offeror.
 Acceptance must given for similar terms on which offer is made.
 Acceptance must give by offeree only.
Consideration: consideration is the element of the contract which determines the validity of the
contract. Consideration is defines as the price which is asked by the offeror in context of promise
made to the offeree, In other words, it is the amount paid by the promisor in exchange of his
promise. In Singapore, consideration is considers as essential part of the contract. In common
law also, consideration is the important element for ensuring the binding contract between the
parties. Consideration must be in monetary terms.
Intention to create legal relations: this element stated that parties of the contract must be intends
to create legal relations with each other at the time of signing the contract. Presence of
consideration is the proper evidence to determine that parties want to create legal relations with
each other (Yian, Woan & Ho, 2014).

Business Law 3
Answer 2
Part A
Issue:
Whether there is any contract between the SG and AG in context of purchasing the key coin box:
Law:
An offer given by the one party to another party under the contract must be different from the
invitation to deal for establishing the valid contract between the parties. Determining the
difference between the two is not the simple process, and the test in this context is base on the
intention of party. This test determine whether party who is making the statement is intend that
any proper response will result in the binding contract between the parties or will result in the
further negotiation.
In case law Pharmaceutical Society of Great Britain v Boots is considers as the leading case,
and in this English Court mainly focus on the commercial impact that categorize the conduct as
an offer. In other words, if it was not commercially convenient to determine the statement or
conduct as an offer then court will consider it as invitation to deal only and not the offer.
In this case, Court held that there was no offer on part of the shopkeeper and it was only the
invitation to deal. Court further stated that, goods displayed on the shelfs of the shop was
displayed with the intention that customer can choose what they want, and when customer
choose the article and get it to the payment counter then customer was making the offer to
purchase it. Contract was complete at the time when seller accepted offer ((Yian, Woan & Ho,
2014).
Application:
In the present case, Mary emailed the Jean by stating that she would like to place the order of
1000 key coin box at $12 per unit, and on this E-mail Jean replied that discount can only provide
discount on 5000 pieces.
In the present case, there was no contract between the SG and AG because there is no offer on
part of the SG. It is only invitation to deal because Mary does not intend to create binding
contract as her statement result in the further negotiation and not in the binding contract. This
test determine whether party who is making the statement is intend that any proper response will
result in the binding contract between the parties or will result in the further negotiation.
In case law Pharmaceutical Society of Great Britain v Boots court considers that commercial
affect that categorize the conduct as an offer. In other words, if it was not commercially