Business Law Essay

3009 words - 12 pages

Business Law


I. Explain with cases the essentials of a valid contract.

Introduction

Contract, in the simplest definition, a promise enforceable by law. The promise may be to do something or to refrain from doing something. The making of a contract requires the mutual assent of two or more persons, one of them ordinarily making an offer and another accepting. If one of the parties fails to keep the promise, the other is entitled to legal recourse. The law of contracts considers such questions as whether a contract exists, what the meaning of it is, whether a contract has been broken, and what compensation is due the injured party.

The Essentials of a Valid Contract

The essential elements of the formation of a valid and enforceable contract can be summarized under the following headings:
1. There must be an offer and acceptance, which is in effect the agreement.
2. There must be an intention to create legal relations.
3. There is a requirement of written formalities in some cases.
4. There must be consideration (unless the agreement is under seal).
5. The parties must have capacity to contract.
6. There must be genuineness of consent by the parties to the terms of the contract.
7. The contract must not be contrary to public policy.
In the absence of one or more of the essentials, the contract may be void, voidable or unenforceable.

Among these seven elements only three are needed to be present under British law in order for a contract to be valid and enforceable.

There must be an offer and acceptance, which is in effect the agreement.

In order to decide whether a contract has come into being it is necessary to establish that there has been an agreement between the parties. In consequence it must be shown that an offer was made by one party (the offeror) which was accepted by the other party (the offeree) and that legal relations were intended.

Offer:

A proposal to enter into certain arrangements, usually accompanied by an expected acceptance. For example, an offer to purchase a house for $50,000.
It is a proposition to do a thing. An offer ought to contain a right, if accepted; compelling the fulfillment of the contract and this right when not expressed is always implied. By virtue of his natural liberty, a man may change his will at any time, if it is not to the injury of another; he may, therefore, revoke or recall his offers, at any time before they have been accepted; and in order to deprive him of this right the offer must have been accepted on the terms in which it was made. Any qualification of, or departure from those terms, invalidates the offer unless the same be agreed to by the party who made it. When the offer has been made, the party is presumed to be willing to enter into the contract for the time limited, and if the time be not fixed by the offer, then until it be expressly revoked or rendered nugatory by a contrary presumption.

Suppose Bob puts up an ad in a Real Estate...

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