Devy Topia Bsbafm2 Business-Law-Quiz3

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DEVY MAR M.

TOPIA
BSBA-FM2
BUSINESS LAW QUIZ
1. Explain the essential elements of a valid contract. Provide examples to illustrate each element.

Under common law, offer, acceptance, consideration, and legal capacity, are necessary components
of a legally binding agreement. According to common law, an offer is necessary for there to be a
contract in the first place. An offer is the offeror's willingness to give something to the offeree. This
offer needs to be communicated, which means the person making it needs to state it clearly. In order
for a contract to be made, the other party must accept the offer. For this reason, one of the
prerequisites for a legitimate contract under common law is the other party's acceptance. In other
words, acceptance is the offeree's voluntary acceptance or agreement to the terms of the offer.
Acceptance can be made explicitly known or inferred. A written or verbal declaration indicating one's
approval or agreement to the offer is known as an expressed acceptance. Conversely, an implicit
acceptance denotes the offeree's consent or acceptance of the offer in the form of a deed or
performance. For example, if John offers to sell his car to Sarah for P10,000, and Sarah accepts the
offer, this forms the basis of an agreement.

Consideration is another requirement for a contract to be enforceable under common law. This can be
defined as anything of value, including a commitment to do an act or, in certain cases, patience. An
offer will not be enforced if there is no consideration, or to put it another way, if the offeror is
unwilling to make a commitment or give up something. There ought to be a consideration in a
contract. The question of whether one party will provide the other with something of value now
arises. For instance, if Jane promises to pay Tom P500 in exchange for painting her house, the P500 is
the consideration for Tom’s promise.

In addition, for the agreement or contract to be enforceable, the parties involved must be of legal age.
In other words, the parties must be of legal age, mentally capable of comprehending the contents and
gravity of the agreement, and free from illicit drug or alcohol use. For example, contracts entered into
by minors may not be enforceable unless they are for necessities.

These elements contribute to the enforceability of a valid contract. These elements give a foundation
for the parties to ensure that they are entering an agreement that is clear and both parties are aware
of the terms of the contract. Furthermore, these elements will ensure the two parties involved, that
they are not entering an unfair and unethical agreement. Lastly, these elements, provide legal basis,
for seeking solutions or remedies in case there is a breach of contract

2. What constitutes a breach of contract? Describe the types of breaches and the possible remedies
available to the innocent party.

When a party doesn't carry out their end of the bargain as specified in a binding legal agreement, that
party has violated the agreement. This failure can manifest itself in a number of ways, and the
different kinds of breaches fall into three primary categories.
The most serious kind of breach is called a material breach, which occurs when one party doesn't
carry out a substantial portion of the agreement and causes the other party serious harm. A minor
breach, sometimes referred to as an insignificant breach, happens when one side doesn't do their
share of the agreement. Lastly is the anticipatory breach. When one party clearly indicates before the
actual performance is due that they will not fulfill their duties.

Now the innocent party has different ways and several remedies available if there is a breach of
contract . These remedies aim to provide relief to the innocent party and address any harm caused by
the breach of contract.

One of them is the damages, monetary compensation is the most typical form of solution for contract
violations. The innocent party may be entitled to receive damages that are intended to place the
innocent party in the same situation as they would be if the contract had been fulfilled. Another
option of the innocent party, is that a court may mandate specific performance in situations when
monetary damages are insufficient to hold the party who violated the contract accountable for their
actions.

In addition, Using this recession, the innocent party can end the agreement and put the parties back in
their pre-agreement positions. Lastly, the innocent party can do reformation as a remedy to the
breach of contract of the other party. A court may decide to amend a contract to better reflect the
original goals of both parties in certain situations.

3. Discuss the importance of offer and acceptance in the formation of a contract. Provide examples of
situations where an offer may be revoked or terminated.

Offer and acceptance are important because they establish mutual assent, which is necessary for a
legally binding agreement to be formed. There wouldn't be any obvious sign that both parties have
consented to be bound by the same conditions without these components. Consequently, an offer
and its acceptance show that the parties have reached a consensus and that they intend to establish
legal relations.

An offer is a declaration of intent made by one party to another, indicating their desire to enter into a
contract with specific conditions. The concept of “offer” in contract law is basically a proposal made
by the offeror to its offeree, which indicates that the offeror is willingly to enter a legally binding
agreement to the offeree. The offer is the start of a contract, if there is no offer meaning to say there
is a contract to be made.

A legally enforceable agreement is formed between the parties when they accept this offer, indicating
that they agree to these terms. It is significant in forming a legal binding contract, because the offer
will just be an offer and will not be a contract without the acceptance. The offer should be accepted
by the offeree in order to form a contract. Through acceptance we can establish a contract, which
means that the two parties involved can understand and are willingly and knowingly bound to the
terms and conditions of the contract. This procedure is essential because it proves that the parties
want to be legally bound by the terms of the contract.
An offer may be revoked or terminated for a number of reasons, and there are multiple scenarios in
which this can happen. One typical instance is when the offeree declines the offer before it expires or
fails to accept it within the specified time frame, if any. A further instance would be if the offeror
withdraws the offer prior to the offeree accepting it. For this revocation to be effective, the offeree
must be informed. Furthermore, the offer may be withdrawn or ended prior to acceptance if the
subject matter becomes unlawful or impossible. Moreover, the initial offer is terminated and a new
offer is made if the offeree makes a counteroffer in response to the initial offer being rejected.

4. Differentiate between absolute and conditional obligations. Give examples of each and explain the
legal consequences of failing to fulfill these obligations.

Obligations that are absolute must be performed in spite of all situations and conditions. To put it
another way, they are required to be carried out without exception and without qualification. There
may be legal consequences for not meeting an absolute obligation, including fines, damages, or
specified performance.

The settlement of a debt is an illustration of an absolute obligation. When someone takes out a loan
and commits to paying it back on a specific date, they have an unbreakable duty to pay back the
money. In all cases, the borrower has a legal obligation to return the debt in accordance with the
terms of the agreement. If this isn't done, the lender may take legal action to recover the debt and
may even ask the court to issue an order for repayment.

On the other hand, conditional obligations are those that are dependent upon the fulfillment of a
specific situation or event. Certain circumstances must be satisfied in order for these duties to be
performed; otherwise, they may not need to be. The provisions of the contract or agreement that lays
out the conditions will determine the legal consequences of breaching conditional obligations.

A sales agreement with a delivery condition is an illustration of a conditional obligation. The duty to
pay for the items is dependent upon the buyer's agreement to acquire them only if they pass a
satisfactory examination upon delivery. The buyer could not be required to satisfy the payment
requirement if the products are delivered and the buyer is not satisfied. However, the buyer may
suffer legal consequences, such as being sued for breach of contract, if they neglect to perform their
half of the bargain without good reason.

5. Outline the various ways in which a contract can be discharged. Discuss discharge by performance,
agreement, frustration, and breach, providing examples for each.

The ending of the contractual relationship between the parties is referred to as "discharge of a
contract." It represents the agreement of the parties' respective duties and the fulfillment of all or
part of the contractual obligations. Contracts can be discharged through various means such as
performance, agreement, frustration, and breach. Each method has its own implications and
consequences for the parties involved.

The first one is discharged by performance. Performing under a contract is one of the main ways it can
be terminated. When both parties carry out their end of the agreement as stated in the contract, this
happens. A contract is deemed discharged by performance, for instance, if someone hires a contractor
to build a house and the contractor does the work in accordance with the specified parameters.

A contract can also be discharged by agreement between the parties involved. This may involve a
mutual decision to terminate the contract or to modify its terms. For instance, if two businesses enter
into a partnership agreement but later decide to dissolve the partnership, they can discharge the
contract through mutual agreement.

Contract frustration arises when unanticipated events cause the performance of the contract to be
impossible to perform. This could include things like natural disasters, war, or any changes in the law,
that make it hard to carry out the terms of the contract. For example, the government imposes a
lockdown, consequently the music concert will be impossible to carry out that is why this is an
example of a contract being frustrated.

Lastly, discharge by breach, if one party breaches the terms of the agreement and doesn't provide a
good reason for their failure, the agreement may be terminated. For example, a breach occurs when a
seller does not deliver items in accordance with the terms of the agreement. The innocent party may
then decide to pursue remedies for the breach and regard the contract as discharged.

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