Elements of a Valid Contract and Contractual Rights and Liabilities

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Fact Pattern Analysis

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Answer 1
A contract is referred to a legally binding agreement which is formed between two or
more parties. This agreement creates a legal duty or responsibility on the parties of the
contract to ensure that they comply with the contractual terms (Blum & Bushaw, 2012). The
objective theory of contract provides that only the contracting parties shall be bound by the
contractual terms which can be objectively inferred from promises made. This theory
provides that an agreement between two or more contractual parties exist if a reasonable
person could judge their actions and behaviour to consider them objectively construe
agreement.
Answer 2
The contractual rights and liabilities are only available for parties if they form a valid
contract with each other. There are four key elements which must be present in order to form
a valid contract. These elements include agreement (offer and acceptance), consideration,
legal purpose and mutual consent. An agreement must form between the parties of a contract
in which a valid offer and acceptance must be given by contracting parties to form a legal
relationship. The party must have the intention to bind itself into the terms of the offer after
the intention is received (Schwenzer, Hachem & Kee, 2012). Moreover, the acceptance must
be communicated to consider as valid. The consideration is something which is exchanged by
the parties as the bargain of the contract. Parties must have mutual consent to create a legal
relationship with each other. The contract must be formed for legal purpose only because a
contract for illegal purpose is considered as invalid.
Answer 3
An effective offer has the authority to bind the contractual parties into a legal
agreement; however, certain elements must be fulfilled for an effective offer. There are three
elements of a valid offer. The first element is that the offeror must have a serious intention to
comply with the terms of the offer after receiving the acceptance. The second element is that
the terms which are included in the offer must be reasonably certain and both parties must
understand those terms (McKendrick, 2014). The object or action in the contract must be
clearly defined in the offer, and both parties must understand them. The time of performance
of the contract must be stated clearly in the offer. The third element is that the offer must be