Summary of Essential Elements for a Valid Contract - Business Law

This summary outlines the critical elements of a valid contract, including a valid offer, acceptance, mutual consideration, legal capacity of the parties, and legality of the underlying purpose. The analysis is based on a textbook chapter and a video resource, highlighting the essential components necessary for a legally enforceable agreement. The summary details the importance of a definitive offer, the different forms of acceptance (oral, written, or by engaging in an activity for unilateral contracts), and the necessity of mutual consideration as an incentive for both parties. It also emphasizes that contracts with minors, intoxicated individuals, or those with unsound mental states are void due to lack of legal capacity, and that contracts for illegal purposes are also invalid. The summary further explores interesting aspects such as the medium of communication's impact on timing, the role of silence in acceptance, the distinction between invitations and offers, and the effect of counteroffers on contract enactment, providing a comprehensive overview of the key considerations for valid contract formation.

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Abstract
The various crucial elements of a valid contract have been indicated. These include
presence of a valid offer, valid acceptance along with presence of mutual consideration.
Additionally, the parties must have legal capacity and the underlying purpose is legal. These
requirements have been detailed in the textbook chapter which offers interesting insights into
the various aspects related to contract enactment which is pivotal in modern business
environment.
Summary
The given video highlights then essential elements that are necessary for a valid
contract. One of these is the presence of an offer and acceptance. It is imperative that the
offer is definitive in nature so that the court can highlight the exact contractual commitment
between the parties. Also, the offer is a promise which may be directed towards a particular
entity (bilateral contract) or people at large (unilateral contract). For valid contract,
acceptance should be provided to the offer which in case of bilateral contract is through oral
or written communication. However, for unilateral contracts, acceptance is communicated by
engaging in the underlying activity. Additionally, seeking greater details does not amount to
either offer or acceptance (You Tube, 2014).
An additional element that is required is in the form of mutual consideration present
for the contracting parties. This essentially provides incentive for the contracting parties so as
to engage in an contractual agreement. If consideration is not present for either of the parties,
then the contract would be null and void. Also, it is required that the parties entering into
contractual relationship must have the legal capacity to enter into a contract. The implication
of this is that contracts enacted with minors, intoxicated people and people with unsound
mental situation are considered to be void since these parties lack the capacity to engage in

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rational decision making. One last requirement of a valid contract is the presence of legal
purpose as contracts enacted for illegal purposes are considered void (You Tube, 2014).
The given video is quite relevant to the course as it enables highlighting the main
aspects with regards to enactment of contract which forms basis of legal relationships
especially in trade and commerce. In this backdrop, it is imperative that these aspects related
to valid contract must be considered so that the legal enforceability of these documents is not
adversely impacted. The content of the video is in line with the contents of the textbook
chapter related to content and classification. The video provides a summarised view of the
key aspects related to a valid contract whereas the textbook chapter provides a detailed view
highlighting the various aspects of the valid contract highlighted in the video.
There are various interesting aspects particularly related to offer and acceptance. A
fascinating component in this regards is the medium of communication and the underlying
impact on the timing. This is particular significant in places where there is integration of old
and new modes of communication. Additionally, the role of communication in acceptance is
particularly pivotal especially when taking silence into cognisance. Besides, the difference
between invitations and offers is also quite noteworthy as in a business environment, often
there is confusion regards the two terms. The impact of counteroffer on the offer and contract
enactment was also quite captivating since often it is a key parameter in the determination of
whether an enforceable contract exists or not. Another interesting form of contract that I
came across is unilateral contract where acceptance is communicated through engaging in
activity rather than through traditional communication means (Miller, 2013).
Conclusion
The above discussion clearly highlights not only the key aspects related to valid
contract enactment but also provides in depth understanding in relation to form and

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classification. This has high relevance in the context of the given course and the importance
assumed by contractual relations. Further, there are various interesting aspects such as mode
of communication, type of contracts, counteroffer etc. that have been highlighted in the
discussion.

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References
Miller, R.L. (2013) Fundamentals of Business Law: Summarized Cases (9th ed.) New York:
South-Western Cengage Learning
You Tube (2014) Requirements of a Valid Contract, Retrieved from
https://www.youtube.com/watch?v=50YEE4UOqGY