Law for Business Managers: Contract Elements and Legal Implications

This report delves into the core principles of contract law relevant to business managers. It begins by defining a contract and outlining its essential ingredients, such as offer, acceptance, and consideration, drawing on English law. The report then explores the concept of 'intention to create legal relations,' discussing whether English law presumes such an intention in various scenarios. Furthermore, it highlights the critical differences between an offer and an invitation to treat, clarifying when a legally binding agreement is formed. The report concludes by examining the point at which offer and acceptance become legally binding. Through this analysis, the report provides a comprehensive understanding of contract law principles and their practical implications for business management.

Law for Business Managers

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
1. The basic ingredients of a contract .........................................................................................3
TASK 2............................................................................................................................................5
2. Discussing Whether English law will presume there to be an “ Intention to Create Legal
Relations......................................................................................................................................5
TASK 3 ...........................................................................................................................................7
3. Difference Between Invitation and offer................................................................................7
TASK 4.......................................................................................................................................8
4. The point at which offer and acceptance take place................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business law is also known as commercial law. The corporate legislation is all about the
conflicts that can arise between management, shareholders of bid multinational organisations,
board of directors, business partners etc. The dispute may be related to share, investment of
capital, mergers, profit and losses. Business law holds the regulations and legislation that are
relevant to components or elements of business, for instance corporations, partnership etc. It
includes all the law that rules the way business should be set up, run and manage.
English law is the the system of legislation that has been developed in England. The
structure of English law consists of legislation, common law and other legal regulations as well
as norms that has been formulated by parliament, Judiciary and court of crown. It is applicable to
both England and Wales.
The report has focus on Identifying the basic ingredient of contract. It also include
the discussion related related to subject matter whether English law presume there to be an
intention to create legal relation. The project will highlight the3 major difference between offer
and invitation to treat.
TASK 1
1. The basic ingredients of a contract
A contract is defined as agreement between two parties that is giving rise to legal
obligations which are enforced by legislation. The terms and condition in the contract are3 to be
followed by both the parties in contract. According to English law , if in case any of the party
fails to comply with any term than in such case the agreement can be Void or null. Contract is a
branch of the law of obligations in jurisdictions of the civil law tradition. Contract law concerns
the rights and duties that arise from agreement. Each party facilitating contract have the potential
to enter into the agreement. The parties who are willing to enter into an agreement needs to fulfil
following criteria in order to form valid contract. The following criteria include a valid offer,
acceptance of proposal, consideration provided by both parties, an intention to create legal
relation, certainty of terms etc. In common legislation there are 3 basic essentials to the creation
of a contract these are agreement, contractual intention and consideration (Bagley and Dauchy,
2011)
The agreement takes place when one part presents the proposal or offer to other. The
another party has the right to accept or reject the proposal. If in some case the other party

accepted the proposal then the offer is when signed by both the parties convert into an
agreement. The objective test is facilitated by the English court to identify that whether both the
parties are in contract or not.
The essential element that must be established To demonstrate the development or
arrangement of legally binding contract are acceptance, offer, consideration, mutuality of legal
obligation, competency as well as capacity and written instrument.
Offer: It is an expression of willingness or desire to form contract on specified terms and
conditions. The contract should be facilitated with the purpose that it is to be followed once
accepted by individual to whom contract is being addressed. There must be an objective
manifestation of intent by the offerer to be bound by the offer if accepted by the other party. An
offer or proposal can be presented by one individual to other person or group. The proposal or
offer can be formed by conduct or expressly by words. It should be distinguished from an
invitation to treat. Intention or objective is the factors that helps individual in determining that
whether the document is invitation or offer.
The offer can be revoked by parties any time before the acceptance. It is essential for the
recipient to inform about revocation to the offerer. Once the proposal is accepted, it means that
parties has successfully formed an agreement.
Considerations-It is essential for both the parties to provide their mutual consent related to the
terms and condition of an agreement.
Acceptance: It is a final as well as qualified expression, of agreement in terms of an offer. It is
essential for an individual to possess intention of being bounded by the contract. Recipient of the
contract is require to follow all the terms and condition in an agreement. If in case, the person
fails to do so then, such individual has to bear legal obligation. It is very much important to
facilitate valid contract that it must be accepted by recipient in accordance with prescribed terms
and conditions (Jones, 2017) If the contract or agreement is signed by both the parties, as per
English law it is considered that both the persons have read the terms and conditions. Contract
must be exactly match the offer and all terms as well as conditions must be agreed or accepted by
the recipient. If in case communication fails to proceeds outcome as a acceptance in such
situation is refereed to as counter-offer. This offer can be accepted or rejected by the offerer.
Facilitating the counter offer lead to the rejection of original proposal.

The terms of contract can be classified as the express or implied terms. Expressed terms
of contract is that where the parties may record their agreement or contract in m,ore than one
document. Implied terms refers to the status that is not expressly established in the contract but it
is required by parties to follow such terms and conditions.
Consideration : This is the essential element of contract. Consideration can be referred to as
something that is valuable like product or services. It can also be defined as important factors
that may involve right5 , interest, profits and other benefit that can be gained by one party. This
types of advantages can be gained from any forbearance, detriment, loss or responsibilities
occurred and after being experience of the promise. Consideration includes of executor, executed
except for past. Consideration take place when the task has not been completed yet but required
to be done in the future. It occurs as requirement in order to allow the party to enforce a promise.
In given case, when the Sue has agreed to get help from her friend Alinson. The other situation is
when Alison was more than happy to step in and help her best friend by providing her with
flour, and has continued to do so for the past 10 weeks (Scholes, 2015. )
TASK 2
2. Discussing Whether English law will presume there to be an “ Intention to Create Legal
Relations
Intention to create legal relation is a important element in order to form valid contract.
This is because intention to create legal relations consists of readiness of a party to accept the
legal sequences of having entered into an agreement. Intention to create legal relations is a
motion of every contracting party must have the essential purpose to enter into a legally binding
contract. In given case study Alison’s does not have a objective to develop legal relationship
with her friend when she decided to give an offer just to help her friend to overcome difficult
situation. The necessity of intention to develop legal relation in contract legislation intends at
separation out cases that are not really suitable for court action. According to English legal
system not every agreement leads to binding contract which can be implemented through the
courts. The parties in contract do not have purpose to be legally bounded by the agreement. The
intention to built legal relation also means the parties in contract must be serious about the
importance of agreement (Siedel and Haapio, 2010)
If in case there is no specific objective to form legal relation the agreement or contract
will not be implemented or enforceable as as legally binding. Intention to make legal relation is

a important element in order to form valid contract. if there is no intention to create a legal
relation, the contract can be assumed as a not legal. She has given advertisement in newspaper to
offer same product to other people and to boost sales. Alison’s has the right to do so as such she
has not formed legally binding contract with her friend.
Without purpose to develop legal relation as per the English law the parties can not able
to sue each other for not fulling their roles as per the contract. If in case there is no intention to
form legal relation , this may lead to the parties in contract are not legally bounded and such
situation may further result into the contract or agreement is enforceable.
Without intention to create legal relations the contract may become a mere promise. In
addition to above conditions if any of the parties does not intends to enter into a binding contract
then in such case, it will make any contract to become a mere promise. It is just like a simple
promise when parties want to form contract but does not want top bind themselves with the terms
and condition in such case then can make promise to fulfil their roles and responsibility.
The contracting parties cognition will be obvious to enter a serious contract. This means
that when parties plan to enter into a contract , they should understand the contents, term as and
condition in the contract. This is due to their ‘intention' to be consenting mind which both of the
parties have to agree. If any of the party does not have intention to enter into legally binding
agreement than in such case the contract can be void or null (Stewart and et.al, 2014)
In given case study, the situation of mere promise can be identified when Alison’s does
not have intention to develop legal relation. As she know that she would not have enough flour to
meet demand. In addition, she realised that even if she did have enough flour to supply, she
would lose money with this offer.
In context of common code of conduct related to commercial relation there is a
presumption or intention to be legally binding. As the given case is related to social friend
relation there is no precondition of to be legally binding.
When an agreement is formulated in relation to commercial context , the legislation raises
a consideration that the parties in contract intended to develop legal relations by the mutual
agreement. Intention to Create legal relations indicates that both the parties are interested in
entering into a legally binding agreement in which the rights as well as obligation of the contract
are enforceable. In given case scenario, it is relatively convinced that business representative,
meeting in a formal commercial setting or arrangements in order to facilitate negotiation related

to the terms and condition of contract. This activity indicates that the both the parties intends to
develop legal relations (Stewart and et.al, 2014)
TASK 3
3. Difference Between Invitation and offer
An invitation is defined as a condition in when client invites contractor to make a person
offer. On the other hand, When the clients presents the proposal for job to other person without
making advertisement it is known as offer.
A person providing invitation does not intends to be get bounded as soon as it is
accepted by other individual to whom statement is presented. The invitation to an offer is an act
which results into the offer which is made with the intention of negotiating the terms. On the
other hand, here is an intention to enter into a contract, of the party, making it and thus it is
certain (Storey, 2016)
Invitation means inviting other person to make proposal. Whereas offers refers to the
proposal presented to other individual. An offer is an essential element to make an agreement
between the parties, but an invitation to offer is not an important element until it becomes an
offer (Hartono, 2014)
Basis offer Invitation
Meaning When an individual expresses
the desire to another person to
facilitate or not to conduct
particular act , to accept the
proposal is defined as an offer.
When individual expresses
something to other person , or
invite another individual to
make offer it is referred to as
invitation.
Purpose/Intention The intention of the person
providing offer is to enter into
a contract or agreement.
The objective of an individual
providing invitation is to
facilitate negotiation related to
terms and condition. The other

purpose may be to develop
legal relation with other parties
to get benefit of relationship in
the future.
Important or necessary to
make an agreement
Yes No
Outcome When another party accepted
the offer it get converts into
agreement.
The invitation becomes an
offers when accepted or
responded by the another party
to whom proposal is presented.
In given case study Alison’s advertisement in the local paper amount to an invitation to
offer. As Alison’s has given advertisement for inviting the other party to make offer to take
tender or goods from her organisation. It has been identified from the given case study is that the
intention of given advertisement is to invite contractors, retailers to make offer to Alison’s . The
firm that has given advertisement has the willingness to enter into mutually binding agreement or
contract. The act of Alison’s demonstrate that individual have desire or willingness to develop
commercial relationship in order to gain benefit in the future. It has been analysed that the
purpose of invitation to offer is to facilitate negotiation with retailers or other party. An invitation
to treat is not an offer but it represents that Alison’s have desire to negotiate a contract. It is
considered as pre-offer communication (Koehn, 2013)
TASK 4
4. The point at which offer and acceptance take place
Acceptance is refer to as unconditional agreement communicated by offer to the offer or.
The agreement presented as a proposal contains an agreement that is made with the intention to
be accepted by the person to whom proposal is made. Behaviour of the parties helps in
recognising whether an acceptance has in fact occurred is determined. It also assist court in
identifying the correspondence that has been passed between both the parties in contract. Offers
must be accepted unconditionally (Koehn, 2013)
If in case offeree intends to counter offer , this may lead to irrelevance of the original
offer. For example in given case Alison’s able to list an item with the fixed price that is referred

to as an offer but individual can sell it for a best offer, such situation is considered as the offer
making a counter offer. If in case, in given case Alison’s is a seller accepts a counter offer this is
known as valid acceptance or offer. It is essential by the receiver to communicate t6hat he or she
has accepted the terms and conditions in the contract or agreement. When the individual who has
presented the proposal or provided offer receives the acceptance by the other party or person ,
the contract becomes effective (Lyons and et. al., 2016)
In other case, the person who has provided offer may demand a specific method of
communication regarding acceptance of all terms and contract in the contract. It is essential to
clear that specific activity is conducted with the absolute purpose of accepting the offer or
proposal. For instance, in the given case study when the contract related to supply of raw
material has been proposed by Alison to her friend and sue accepted the offer this is known as
valid acceptance as well as offer. The communication of offer and acceptance has taken place
through Email. According to the terms and condition in contract Alison will deliver particular
product within 2 to 4 working days. But if in case, Alison fails to deliver product on time then
there is much chances that contract can become void or null. And due to failure to comply with
terms and condition of the agreement Alison may have to face legal obligation if she would have
entered into a legally binding contract with her friend. As both the parties have not formed the
valid contract and does not have intention to enter into legally binding contract. In such case the
both the parties does not have option to file law suit in the court. If tin he situation that Alison
has failed to supply material on time then she has the option to communicate about delay to the
client. As this activity will assist her in preventing legal obligation. It also will assist her in
developing as well maintaining healthy relationship with client. The other option available with
Alison is that she could ask for reasonable time for delivery of product. The third alternative is
termination of agreement by giving proper notice to the client (Park,2012)
CONCLUSION
The report has concluded that according to the contract law in English legal system it is
essential for the parties those who are willingly enter into a contract to fulfil certain criteria. It
has been concluded from the project that in order to form effective and valid contract it is
essential for the parties to develop intention of being legally bonded by the terms and agreement
in the contract or agreement. The parties in the contract if fails to comply with any of the terms
as well as condition in the contract in such cases the contract can become void or null.

It is recommended to the parties that if they are willingness to form valid contract then
they should consider all the essential elements of agreement. The parties should follow various
rules and principles related to various elements required for forming valid contract. In given
case study mere promise and communication about delay are the two method that has been
suggested to Alison. As this activity will assist her in maintaining relationship with her friend
and will get a chance to fulfil her responsibility.

REFERENCES
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Education.
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Stewart, D. and et.al, 2014. Native American Cultural Capital and Business Strategy: The
Culture-of-Origin Effect. American Indian Culture and Research Journal. 38(4). pp.127-
138.
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