Unit 21 - P1,P2&P3
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In this assignment I’m going to identify the legal criteria for
offer and acceptance in a valid contract
Acontract is an agreement or set of promises, enforceable by
law, made between two or more persons. In the business world,
it is more than a mere promise, there must be an intention to
create a legally binding agreement between parties and they
must intend to give something of value as consideration to add
value to the set of promises. The main elements needed for a
valid contract are: offer, consideration, acceptance and
capacity.
A formal contract – Is an agreement between two parties that
is legally binding and enforceable. This contract must include
an offer, acceptance of the offer, consideration, capacity.
Informal contract – Is a contract that does not require a
record and does not have to be signed, for example: If you want
to order Chinese food in exchange for payment, there is a
mutual trust that both parties will perform as promised in the
oral agreement.
OFFER: In contract law, an offer is a promise in exchange for
performance by another party. An offer can be revoked or
terminated under certain conditions. There are also times when
an offer can be negotiated to create a counter-offer. Offer is
one of the elements that make for a valid contract, there are six
elements to a contract. These elements include: Offer,
Acceptance, Consideration, Mutuality, Capacity and Legally
acceptable terms. The offer can come in the form of a: Letter,
Newspaper, Website, Fax, Email and Behaviour.
CAPACITY:The ability, capability, or fitness to do something; a l
egal right, power, or competency to perform some act. An abilit
,Unit 21 - P1,P2&P3
FOR NOTES AND GUIDLINE PURPOSES ONLY, COPYING THE
WHOLE DOCUMENT WILL BE COPYWRITE.
USE SENSIBLE.
y to comprehend both thenature and consequences of one's act
s. It is the power eitherto create orto enter into a legal relation
under the same conditions or circumstances as a person of sou
nd mind or normal intelligence would have thepower to create
or to enter.
A contract is a binding agreement which governs the
relationship between two or more people or companies, setting
out what they must and mustn’t do. The basic elements of a
contract are mutual assent, consideration, capacity, and
legality. Possible remedies for breach of contract
include general damages, consequential damages, reliance
damages, and specific performance. A contract generally has to
do with employment, sale, lease and even tenancy.
An offer
An offer is a definite promise from one of the parties to the
agreement made. They make his promise with the intention
that it shall become binding or legally enforceable as soon as it
is accepted by the person receiving the offer. The offer must be
complete, specific and capable of being accepted. It must
include the fundamental terms of the agreement with the
intension that no further negotiations are to take place. One of
the factors that indicates an offer has not been accepted is
when a counter-offer is made.
Counter offer
Counter offer is a type of offer made in response to another
offer, which was seen as unacceptable. A counter offer revises
the initial offer, making it more appealing for the person
making a new offer. Responding with a counter offer allows a
,Unit 21 - P1,P2&P3
FOR NOTES AND GUIDLINE PURPOSES ONLY, COPYING THE
WHOLE DOCUMENT WILL BE COPYWRITE.
USE SENSIBLE.
person to decline on a previous offer, while allowing
negotiations to continue.
Communication of offers
Offers must be communicated to the other party, usually in
writing although verbal communication will still be valid. If the
offer is not certain, and is too vague then it comes invalid.
When a person enters into contract negotiations, must be
aware of the terms to which they are agreeing to. However,
there is an exception to this rule known as ″reward case″, when
a person makes an offer to a contract to many people or to the
whole world.
Acceptance
A valid offer must be accepted by the offeree.
There are many factors that must be considered when looking
at acceptance.
1. Acceptance of the offer must be communicated to the
person making the offer (the offeror)
2. Acceptance of the offer must be in the form. If no form is
specified, written or oral acceptance will suffice.
3. Acceptance need not necessarily be in the form as long as
the method of acceptance used satisfies the offeree and
the offeror.
4. Acceptance of the offer must be absolute, unqualified and
without condition.
There is a difference between an offer and an invitation to
treat.
Consideration – Is the benefit that each party gets or expects
to get from the contractual deal. There are two forms of
,Unit 21 - P1,P2&P3
FOR NOTES AND GUIDLINE PURPOSES ONLY, COPYING THE
WHOLE DOCUMENT WILL BE COPYWRITE.
USE SENSIBLE.
consideration: executed consideration (an act in exchange for a
promise, such as a reward case where the person making the
offer promises to pay the reward upon the act of the task being
completed) and executory consideration (where the parties
exchange promises to perform acts in the future).
An invitation to treat
An invitation to treat is an indication that a person is prepared
to receive offers from another person. The person who is
available to receive an invitation to treat can accept or reject
the offer until the final acceptance.
An invitation to treat can exist in many ways such as:
- Goods displayed with a price ticket in a shop windows or
supermarkets.
- Products advertised in catalogues, brochures and the
internet.
- The company prospectus issued when a company is
selling its share.
After a misunderstanding in the shop window with the pricing
being wrongly priced. James is offering to buy the iPhone 6 at a
substantially low price compared to the original price. It’s now
the manager’s choice whether or not to accept to accept the
price. In case study 1 James was both innocently and Negligent
misrepresented. The reason I wouldn’t fit fraudulent
misrepresentation into this case is because the issuer of the
product had no clue of his mistake. Having no clue would mean
this scenario falls into the negligent misrepresentation because
it was highly unrealistic that the IPhone 6 witch is new and has
come out this year was at the price of £70. This means instead
of asking if it’s wrong or not he just assumed a preposterous
, Unit 21 - P1,P2&P3
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low price. An invitation to treat, plays a huge roll in this
situation. A short definition of an invitation to treat is an
invitation for customers to submit an offer, and indicates a
willingness to deal. So in other words a deal that hasn’t been
final with anyone signing or both parties agreeing to the terms,
and from this case study it was evident that James and the
shop keeper had a dispute with coming to terms with the shop
window price. We then see a counter offer in place to in order
negotiations to happen. A Counter Offer is an offer that is made
in response to another one for example. James in case study
one getting rejected by the first price then trying to reason with
the manager to get a cheaper price.
Consent
To enter a contract with both parties being well aware of what
there signing. This means they both have to be aware of what
the consequences are and will have to approve of it before
signing. This must include free will and proper understanding of
what each of the parties is doing; the consent of each party
must be genuine.
Consideration
Consideration is defined as something given, promised or done
in exchange by each party to the agreement.
Legal Capacity
Legal capacity is what someone is able to do with in their
lawful obligations being as its within the framework of the
legal system.
