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Common Law Assignment.

1) Different types of business agreements include basic contracts and more complex agreements. 2) For a contract to be valid it must contain certain elements: there must be an offer and acceptance between parties with legal capacity, the agreement must include consideration, all terms must be legal, and the proper form must be used. 3) The key elements for a valid contract are: all parties must have capacity and understand the agreement, there must be a clear offer and acceptance between the parties, consideration in the form of goods, services, or payment must be exchanged, and the purpose and terms of the contract must be legal.

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Hazim Ismail
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90 views

Common Law Assignment.

1) Different types of business agreements include basic contracts and more complex agreements. 2) For a contract to be valid it must contain certain elements: there must be an offer and acceptance between parties with legal capacity, the agreement must include consideration, all terms must be legal, and the proper form must be used. 3) The key elements for a valid contract are: all parties must have capacity and understand the agreement, there must be a clear offer and acceptance between the parties, consideration in the form of goods, services, or payment must be exchanged, and the purpose and terms of the contract must be legal.

Uploaded by

Hazim Ismail
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1a) Different Types of business agreement.

1b) Basic elements for a valid contract.

A contract is an agreement reached after sufficient consideration between two or more


parties that is binding in law. A contract is considered valid or legal when both or more
parties with capacity come under an agreement after involving valid consideration. A contract
contains some elements and if these elements exist then the contract is considered valid while
if one or more of these necessary elements happen to be missing then the contract is void or
voidable. This means that the contract is basically not a true contract and it can be enforced.
Briefly void contract or an agreement is actually not a contract at all. It can be enforced by
law. An example of a contract being void is when a drug dealer and a buyer agree to do
business together, when caught nobody has a case because the terms of a contract are illegal
under the court of law. These parties performed an illegal act when doing this type of
business. While voidable contract is valid, and one party of the contract is bound unless an
entitled party (the party who has legal grounds to reject the contract) voids it. Example,
depending on jurisdiction, a minor has a right to repudiate certain contract. Any contract
involving a minor is considered voidable because a defect exists. The three basic components
of a contract are offer, acceptance, and consideration.
The following are six elements that are able to determine whether or not the basic
components are present and meet legal criteria for a valid contract:
1) All parties must have capacity to enter the contract.
2) An offer must be made.
3) Consideration must be exchanged.
4) The parties must in mutual agreement.
5) The contract’s object and purpose must be legal.
6) The form of the contract must meet the legal requirements.

1) Capacity.
Capacity happens when the parties involved have understood the terms of the contract.
Usually adults have capacity because the tend to understand the terms of the agreement but
minor, mentally incompetent and intoxicated people do not have capacity. A person is
considered a minor when he is below 18 and when they enter a contract is considered
voidable because they have a right to terminate or cancel the contract before reaching 18. The
minors are considered incapable of understanding the terms because they are still underage
while for mentally incompetent and intoxicated people they usually fail to understand the
terms, and people like these do not have capacity.
2) Mutual Agreement (Offer).
Mutuality means that all parties to the contract are interested in its terms and intend an
agreement to which they will be legally bound. For this to occur both parties must make sure
they understand the agreement and they should not be any misunderstanding involved or else
mutuality would not exist. Mutuality is also sometimes called “meeting of the minds” and is
established when an offer has been made by an offeror and then accepted by the offeree. An
offer is a communication that gives the listener the power to conclude the contract. The
general rule is that it must be reasonable under the circumstances for the recipient to believe
that the communication is an offer. If an offer spells terms such as quantity, quality, price
then the court may find that an offer was made. Example if a merchant says to a customer “I
will sell you a dozen high-grade widgets for $100 each to be delivered to your shop on Dec
31” then this can be labelled as an offer and not a statement like “I am thinking of selling
some widgets.” An offer must be differentiated from an “invitation to treat.” Advertisements
are considered invitation for offers. The making of an offer is the first of three steps in the
traditional process of forming a valid contract: an offer, an acceptance of the offer, and an
exchange of consideration.

3) Acceptance.
Acceptance is one person’s compliances with the terms of an offer made by another. It is an
agreement to receive something which has been offered. For example Peter offer to sell his
watch to Paul for $50 and Paul accepts then this is considered as acceptance. In business
dealings between merchants, a buyer demonstrates his or her acceptance of goods that are no
exactly what he or she ordered from the seller by telling the seller that he or she will keep the
goods even though they are not what was ordered. This is called acceptance. An acceptance
may be conditional express or implied.

4) Consideration.
Consideration is the act of doing something or promising to do something that a person is not
legally required to do, or the promise to forbear from doing something that he or she has the
legal right to do. An exchange of consideration must be included in any valid contract.
Between the parties, something of real value must be exchanged whether it can be cash,
tangible objects, and the performance of an act. Consideration should not be confused with a
unilateral promise. A unilateral promise is a promise to do something without an exchange of
consideration. Example If Rihanna tells Ciara that she will give her a ride to a club, Rihanna
has made a promise. If on the other hand, Rihanna tells Ciara she will give her a ride to a club
in exchange for parking money, consideration has been exchanged.

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