elements necessary for the formation of a valid contract
TRANSCRIPT
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
1/18
Executive summary
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
2/18
Acknowledgement
I would like to express my special thanks of gratitude to my teacher Mr.Shane Davied who gave
me the golden opportunity to do this wonderful report on the topic ASPECTS OF CONTRACT
AND NEGLIGENCE FOR BUSINESS, Which also helped me in doing a lot of Research and I
came to know about so many new things. I am really thankful to them. Secondly I would also
like to thank my parents and friends who helped me a lot in finishing this report within the
limited time.
I am making this project not only for marks but to also increase my knowledge.
THANKS AGAIN TO ALL WHO HELPED ME.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
3/18
Table of content
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
4/18
Task 1
Elements Necessary for the Formation of a Valid Contract
1)
A contract intends to formalize an agreement between parties. The three key elements that should be
available for a contract to be valid and enforceable by law are agreement, consideration, and intention
to create legal relations. The first element ensures that the parties bound by the contract have made an
agreement, which is determined by the rules of offer and acceptance. The second element is that the
agreement or obligations assumed by each party must be supported by sufficient consideration from the
other party. The third element is the intention of the agreed parties to make their promises legally
binding.
Capacity
Each person or entity must have legal capacity or authority in order to enter into an enforceablecontract. Examples of persons who lack capacity are minors, those adjudged legally incompetent, and
persons under the influence of mind altering drugs or alcohol.
Offer and Acceptance
Every valid and enforceable contract involves an offer followed by an acceptance. There is no contract
unless the offer is accepted. When one person signifies to another his willingness to do or abstain from
doing anything with a view to obtaining the assent of that other to such act or abstinence he is said to
make a proposal. The first step towards creating a contract is that one person shall signify or make a
proposal or offer to the other, with a view to obtaining the acceptance of that another person to whom
the offer is made. A proposal when accepted becomes a promise.
Consideration
The third necessary element of a contract is consideration. Consideration is defined as something of
value in exchange for something else of value. It can take the form of payment of money for property,
goods or services,; the exchange of property or goods for other property, goods or services, or the
exchange of services for services.
Legal Purpose and Public Policy
The fourth and final essential element of an enforceable contract is that its object must be both legal
and consistent with public policy. Contracts for prostitution or for the sale or use of illicit drugs are
invalid and unenforceable.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
5/18
2)
Types of contract:
Face to face
Written
Distance selling
Verbal- an oral agreement made between two people
Written- contract is written up so that there is an actual copy which can reduce any possible problems
which could arise. Majority of contracts are in this form e.g. a contract of employment
Standard form- businesses usually use a standard contract that states the terms and conditions of an
agreement which are not negotiable. This is common practices as a business would find it extremely
inconvenient if not impossible to create contracts specifically for each individual customer.
Void and Voidable Contracts can be either void or Voidable. A void contract imposes no legal
rights or obligations upon the parties and is not enforceable by a court. It is, in effect, no
contract at all. A voidable contract is a legally enforceable agreement, but it may be treated as
never having been binding on a party who was suffering from some legal disability or who was a
victim of fraud at the time of its execution. The contract is not void unless or until the party
chooses to treat it as such by opposing its enforcement.
Contracts under Seal Traditionally, a contract was an enforceable legal document only if it was
stamped with a seal. The seal represented that the parties intended the agreement to entail
legal consequences. No legal benefit or detriment to any party was required, as the seal was a
symbol of the solemn acceptance of the legal effect and consequences of the agreement.
Express ContractsIn an express contract, the parties state the terms, either orally or in writing,
at the time of its formation. There is a definite written or oral offer that is accepted by the offeree
(i.e., the person to whom the offer is made) in a manner that explicitly demonstrates consent to its
terms.
Implied ContractsAlthough contracts that are implied in factand contracts implied in laware
both called implied contracts, a true implied contract consists of obligations arising from a mutual
agreement and intent to promise, which have not been expressed in words. It is misleading to
label as an implied contract one that is implied in law because a contract implied in law lacks the
requisites of a true contract.
Executed and Executory ContractsAn executed contract is one in which nothing remains to be
done by either party. The phrase is, to a certain extent, a misnomer because the completion of
performances by the parties signifies that a contract no longer exists.
Bilateral and Unilateral Contracts The exchange of mutual, reciprocal promises between entities
that entails the performance of an act, or forbearance from the performance of an act, with
respect to each party, is a Bilateral Contract. A bilateral contract is sometimes called a two-sided
contract because of the two promises that constitute it.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
6/18
Unconscionable Contracts an Unconscionable contract is one that is unjust or unduly one-sided
in favor of the party who has the superior bargaining power. The adjective unconscionable
implies an affront to fairness and decency.
Aleatory ContractsAn aleatory contract is a mutual agreement the effects of which are triggered
by the occurrence of an uncertain event. In this type of contract, one or both parties assume risk.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
7/18
3)
What are the terms of a contract?
Before entering into a contract, various statements will often be made by one party in order to
encourage or induce the other party to enter into the contract. A dispute may later arise as to which of
the statements made should be considered a part, or a term, of the contract, and which should be taken
as merely pre-contract talk, and therefore not a part or term of the contract. Parties to a contract are
bound only by its terms, not by any peripheral statements that may have been made.
The courts can look at evidence of intention by one or other of the parties that the statement should be
part of the contract. For example, the longer the interval is between the making of the statement and
the reaching of the final agreement and contract, the less likely it is that the statement will be
considered to be a term of the contract.
Collateral contracts
A "collateral contract" is a separate contract which exists alongside the main contract. Generally, where
a contract is in writing, the written terms of that agreement form the basis of the contract. In addition,
where statements have been made and intended as a promise, and intended to induce the main
contract, a collateral contract will be held to exist.
Terms may be conditions or warranties
Contracts will always contain different types of terms (said or written), some more important than
others. The more important terms are called "conditions", the less important terms are called
"warranties".
Conditions are so important that without them one or other of the parties would not enter into the
contract. Consequently, to make a condition falsely, or to breach a condition, is viewed so seriously that
the wronged party will be entitled to treat the contract as void, voidable or at least rescinded.
Where the term is a warranty, the wronged party will only be able to seek monetary damages for any
loss suffered. The contract itself will remain binding on both parties.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
8/18
WARRANTIES
A warranty is a less important term: it does not go to the root of the contract. A breach of warranty will
only give the injured party the right to claim damages; he cannot repudiate the contract
CONDITIONS
A condition is a major term which is vital to the main purpose of the contract. A breach of condition will
entitle the injured party to repudiate the contract and claim damages. The injured party may also
choose to go on with the contract, despite the breach, and recover damages instead.
VALIDITY
Parol evidence may be given about the validity of the contract, eg to establish the presence or absence
of consideration or of contractual intention, or some invalidating cause such as incapacity,
misrepresentation, mistake or non est. factum.
INTERMEDIATE TERMS
It may be impossible to classify a term neatly in advance as either a condition or a warranty. Some
undertakings may occupy an intermediate position, in that the term can be assessed only in the light of
the consequences of a breach.
Exclusion of responsibility terms
It is possible to have a term in the contract which excludes one of the parties from responsibility for
something that may go wrong in the performance of the contract or limits that responsibility. It is called
an exclusion clause or an exemption clause.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
9/18
Task 2
1)
Purpose of the contract, both sides made and fixes their rights and obligations under the Agreement to
establish a protocol. The court must be enforced, because it is determined by a valid contract, unless
there is reason to prohibit its enforcement yes.
In this scenario Mr. B wont be able to sue singer mega. In here we can consider these two parts, which
is offer and acceptance.
Offer is an expression of willingness to accept a specific set of terms, made by the offeror with
intention to enter into and be obliged to follow the terms of the contract.
Acceptance is an expression of absolute and unconditional agreement to all the terms set out in
the offer. It can be oral or in writing. The acceptance must exactly mirror the original offer
made.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
10/18
2)
In this scenario Mr.K has claim against PC dealer.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
11/18
TASK 3
1)
Implied as a matter of law within every contract is a covenant of good faith and fair dealing requiring
that neither party do anything which will injure the right of the other to receive the benefits of the
agreement.' Through application of this covenant, a breach of contract may be found when promissory,
by his bad faith conduct, has jeopardized or destroyed a promises opportunity to reap the expected
benefit of the bargain, even though that conduct failed to violate expressed provisions of the
agreement.
Principles of tort
Law gives variousrights to persons
A duty imposed by law to respect the legal right of others
When a rightis infringed, the wrongdoer is liable in tort
e.g. invasion by trespassers into a property
When tortes committed, committed, the remedy is an action for damages, i.e. compensation for
Infringement Crime, tort and breach of contract
Crime
Prohibited by law
The state prosecute the offender
Punishable by fine or imprisonment
Both tort and breach of contract are
Civil wrongs
The person wronged sues in a civil court for Compensation
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
12/18
Tortuous Liability vs. Contractual Liability
In a tortuous claim the defendant may not have any previous transaction or relationship with the
claimant however in contrast to that for contractual liability the defendant and claimant must have a
purpose to create legal relations.
Elaborating on this further there is supplementary sovereignty in contractual law where as in tortuous
liability it is more of an imposed nature. The claimant will receive compensation for damages and
expected earnings in the case of contractual liability and in comparison to this the claimant is only
entitled to damages in the case of tortuous liability
Tortuous and contractual liability
They are similar in that
Both are civil wrongs; and
The person wronged sues in the court for compensation
Differences
In a tortuous claim, the defendant may not have any previous transaction or relationship with the
Claimant
In a contractual claim, the defendant and claimant must be the partysparties to the contract contract
Wrong and damage
You have to prove yourloss if you want to claim damage
No loss, no compensation
Remoteness of damage
When a person commits a tort with the intention of causing loss or harm which in fact results from the
wrongful act, the loss or harm can never be too remote a consequence.
i e.. You are liable to the loss or harm caused by you when you have intention to do so
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
13/18
Damages will be awarded forit
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
14/18
2)
Tort of negligence
The word Tort appears to come from the Latin word meaning twisted or turnedaside, and the Norman French meaning "a wrong".
A tort is a wrongful act that causes injury or damage.
So, a person who is the victim of another person's wrongful act can sue thewrongdoer, who is known as the tortfeasor.
Examples of torts include death, assault, and injury from a defective product, injuryfrom bad driving and damage or destruction of property.
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in likecircumstances (Encyclopedia Britannica, Meriam Webster). The area of tort law known as negligence
involves harm caused by carelessness, not intentional harm.
According to the course book, negligence is when the defendant:
Causing loss by a failure to take responsible care when there is a duty to do so.
the defendant may not wish to inflict injury but by carelessness he allows it to happen.
Negligence occurs when:
Somebody does not exercise the standard of care that a reasonably careful person would use under
the circumstances. (The standard of care is a way of measuring how much care one person owes
another. For some people the standard of care is higher than others. Doctors, for example, have a higher
standard of care toward others than the reasonable person.)
somebody does something that a reasonably careful person would not do under the circumstances.
In everyday life, negligence can arise in many situations, including: on the road, medical and health care,
at work, at ones property, faulty products, etc. Under the law of negligence there are several special
types of liability and some groups are held to a higher standard of care than the average person. For
example, consumers can sue a manufacturer of a product if the product is faulty or does not meet a
required standard. The area of law that deals with negligence on the part of manufacturers is called
product liability.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
15/18
People who own or occupy property have duty to maintain their property so that no one entering the
property will be injured. This legal responsibility is called occupiers liability. Property owners must take
particular care to protect children who may be enticed onto their property by an item such as a
swimming pool. Items that might entice a child to enter someones property are known as allurements.
If found liable, wrong doers must compensate victims in full for losses. On the other hand, if persons by
their own fault cause or contribute to their own injuries, they will be held at least partly responsible for
their damages under the contributory negligence defense.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
16/18
3) Vicarious liability is a form of strict, secondary liability that arises under the common-law doctrine of
agencyrespondent superiorthe responsibility of the superior for the acts of their subordinate, or, in
a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the
activities of a violator (Source: Wikipedia). A person who did not cause the injury has a particular legal
relationship to the person who did act negligently.
It is also referred to as imputed negligence. Legal relationships that can lead to imputed negligence
include the relationship between parent and child, husband and wife, owner of a vehicle and driver, and
employer and employee.
Vicarious liability can be defined to be a situation where someone is held responsible for the actions or
omissions of another person Acas (2009). Taking into consideration the business context, it can be
perceived that an employer can be held responsible for the errors of its employees; provided that it can
be evidenced that the laxity was committed in the course of employment. Elaborating on this further, in
other words; vicarious liability can be referred to employee negligence at work.
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
17/18
Conclusion
-
8/12/2019 Elements Necessary for the Formation of a Valid Contract
18/18
References