Contract is an agreement creating obligations enforceable by law and are binding all the parties which have mutually decided for the settlement. The basic elements of a contract are mutual assent, consideration, capacity, and legality. In some states, the element of consideration can be satisfied b...
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, INTRODUCTION
Contract is an agreement creating obligations enforceable by law and are binding all the
parties which have mutually decided for the settlement. The basic elements of a contract are
mutual assent, consideration, capacity, and legality. In some states, the element of consideration
can be satisfied by a valid substitute (Soyer and Tettenborn, 2014). Understanding all the legal
and regulatory proceedings which are evidently required to perform commercial transactions
became the obligation of the modern era. In the present report, all the essential elements of
contracts are discussed. Further its impact on the business enterprise and individual are also
highlighted in the study. The analysis is based on the scenarios and case studies which lay
profound focus on the application of elements of an agreement.
TASK A: Essential Elements of contract and their importance (AC 1.1)
Contract is an agreement which is enforceable by law. When a contract is made by the
parties it binds them in a lawful agreement. It should be in written or may be in oral. It is promise
made between two or more parties which allow the courts to make judgements. A contract has
six important elements so that it will be valid which is offer, acceptance, consideration, intention
to create legal relation, certainty and capacity (Emerson, 2009). If the elements are not present in
contract, it would become an invalid contract. Some of these features have been discussed
underneath:
Offer
It can be defined as an act or course of action whereby one party creates a message or
provides invitation to the other. A contract is formed when an offer is accepted by the other
party. An offer must be dignified from mere willingness to negotiate. The applicability of the
offer is of reasonable duration until another party revokes it (Cousins, 2011). Citing Example
from the Harey v Facey case which demonstrates that one part wrote a telegram to the other
asking to sell his bumper pen. Facey replied to Harey stating the price of the Bumper Hall pen as
900 pound. The defendant claimed against the Farey in regards to breach of contract. The court
declared that there was no legal contract between both the parties as their was no offer made by
the Farey to sell the pen. He just replied to the telegram stating the price of the product.
Acceptance
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