Valid Contract Essay Sample

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Importance of essential elements required for formation of valid contract The contract law is a situation where law is related to business transactions. In the situations good are purchased, sold, as well as moved through the contract. The employees are hired, land are developed, sold, bought leased or financed under the contract. Most of the businesses are based under contracts. Generally, the contracts represent foundation of the most of the commercial activities and therefore contract law stands for one of the crucial areas of the business law (Egenhofer, 2013). Therefore, a contract is defined as the agreement between two or various parties or individuals, which the court will enforce. The contract law differs from others areas of law since the parties are required to follow principles that are set out in the law to form their own duties and rights, which the courts will enforce (Arnoldt, 2013).

The forming of a binding contract, which the courts is entitled to enforce demands the contracting parties to executes tasks under the prescribed requirements by law of contract. The requirements are described to as elements of the valid contract. They consist the following: * An objective to form a legal relationship

* The offer
* Acceptance
* The considerations
* The capacity to contract
* The legality

Additionally, certain kinds of contracts must be in electronic substitute, in writing or take a particular form to be enforceable (Kennerly, 2010).  The objective to form the legal relationship

The perception of the contract bargain or the agreement struck by the two parties is usually based on the promise, which the end results intends to meet in the parties’ mind on term and conditions, which will create their agreement with one another. Any party will agree to do or either not do, particular things in return for promise of other to perform particular things in a certain nature. In a bind for the parties to establish their interests, the parties are required to introduce particular elements of contract itself. Promise is one of the essential elements of any agreement, apparently, not all the promises that can be taken as the binding on party creating them. Some of the promises might be made by individuals with no purpose of legally becoming obligated to accomplish them, for instance the promises made by the family members.

The initial requirement of the valid contract must be intention of the individual or party making the contract to be bound by promise made. The main aim of creating the legal relationship is to ensure what one has promised must be fulfilled. This ensures one does not encounter losses due to sudden change of mind by one party or individual. In an example, An Expensive Comma, terminated a contract with one year notice, which it had with the Rogers Communications. Rogers felt they get benefit of the entire five year locked term before the contract was terminated. Since the agreement stated that the contract will continue for five years from the creation date unless and until the contracted terminated by any of the parties prior to two years notice through writing (Bremmer, 2012).

The offer and acceptance

The second element of the valid contract deals with the promises created by the parties. Since only the promises created with the intention of forming the legal relationship can be enforced be through court of law. In the usual course of negotiations the one making the promise makes such promises unless certain conditions are attached to it, demanding the other group to give a promise in exchange (Arbatov, 2012). Consequently, the promise is tentative until other party shows willingness to a bind with the condition. Tentative promise made subject to certain condition is hence not binding on offering party until proposal is accepted. The party is bound by the agreement only when the valid acceptance is in acted (Erkan, 2011).

The offer communication

It is crucial to understand that the offer must be communicated by the one introducing the offer to the party offered before the offer is accepted. Therefore, the offer must be initially communicated between the two or various parties before it accepted. The rule might appear normal, but the offer is not always direct as anticipated since in some situations the parties might be required to use telex, fax, letter, email or various communication means. The essential point is that no party or individual can accept an offer unless one is aware of it. The main importance of the offer as well as the acceptance is that the parties can only accept offers that they are well aware off. Accepting offers that one is not clearly aware of might lead to various negative effects as well as huge losses (Kennerly, 2010).

For instance, if the purchasing director of a corporation sends a letter to the seller of certain product indicating that the company wishes to buy a given amount of goods at the seller’s advertised prices and request the goods to be delivered to the company, the letter would comprise the offer to purchase. Acceptance would be effective when the seller acted according to the instructions for the acceptance indicated in the letter. It would not be necessary for seller to reply indicating the acceptance since the delivering of the products indicates the purchasing manager has accepted the offer. Acceptance would be complete only when the seller did the required by terms of comprised in the letter (Erkan, 2011).


Bargain theory of the contracts proposes that the contract is basically an agreement between parties in situation where each of the parties gets something in return from their promises. This being the cases every party offering a promise must be conditional. Promise ought to include the provision that the one offered the offer, through conveying the acceptance, will guarantee something to the one offering the promise. The return that the offer provider receives is called the consideration, which is essential element of all simple contracts (Arnoldt, 2013). The considerations take various forms such as the payment of money, execution of certain service, a promise not to execute something, relinquishment of right, delivery of property among others. Nevertheless, in every situation, considerations must be anything executed with respect to promise offered. Unless the one who made the promise gets positive returns from the promise made, promise is simply gratuitous.

Usually, considerations for the promise must exist for contract to be legally binding (Dawisha, 2011). For instance, Girbert Steel accepted to supply steel in the construction of a number of apartments, which the University Construction was underlying in different locations. The agreed prices were as follows for the different grades $159 and $153 per tone. The initial two constructions was completed at the price, while the price of the steel increased before the third construction to $156 and $165 for every tone. During the construction Gilbert Construction approached the university through a new written contract indicating the new prices. The University Construction maintained to pay their initial amount, which resulted in the Gilbert Steel to take a legal action. The court later concluded that there were no considerations that existed for promise to pay higher rates and the oral agreements fails on that basis (Bremmer, 2012).

The capacity to contract

Not everyone is allowed to enter a contract, which would bind them at law. Particular classes of the promise providers ought to be protected as an issue of the public policy. This is done due to various reasons such as inexperience as well as immaturity or because of their inability to understand nature of their acts in creation of enforceable promises. For instance, Hedrick attended a sale in an auction while he was in an intoxicated state and everyone in the sale venue including the auctioneer was aware of the condition.

When the land and house came for auction, he binds vigorously on them and he became the successful bidder. When he became sober, the auctioneers informed him of the purchase and Hedrick affirmed the contract. Soon after he changed his mind, Hedrick repudiated the contract claiming that he was drunk at the event of purchase and the auctioneers were aware of the condition (Dawisha, 2011). The cases were taken to court, where the court held that Hedrick had the opportunity to avoid the purchase when his condition was alright, but as an alternative he affirmed it. Hedrick having affirmed it, he was bound by the acceptance, moreover he could not repudiate from the contract.


The agreements, which can offend the public good, are actually not enforceable. If any parties enters into an agreement, which has an illegal purpose are not only enforceable but also illegal as well. In such circumstances, the parties are liable to a fine or a penalty for making the contract or executing such tasks. Illegal contract includes any plans to commit a crime that might include arrangements to rob, attain goods under the false pretenses or committing any act that prohibited under the law. For instance, the home owners who engage in the services of the unlicensed tradesperson to execute home renovations such as the plumbing work and electrical assume risk if the task is negligently executed and damage occurs. The insurers may be reluctant to compensate for losses incurred in incidents of fire because of the negligence in the installation of wiring. If the policies requires the electrical renovation or any changes to be made by only the licensed personnel (Arbatov, 2012).

Business scenario 1

According to the principles of the valid contract there must be a promise made which actually was made by the auctioneer then the two parties must accept the offer in which in the following juncture there are no written documents to indicate that the two parties had a valid contract. If Miss. Kaur had legal document indicating that they had a promise with the auctioneer to make the purchases that would be the evidence to be produced in the court of law. Therefore, Miss. Kaur cannot take any legal action. The same case applies to the issue of the pen; she did not have a written document indicating that the two parties accepted the offer. Therefore, the shopkeeper could not resist the better offer and he was certain that Miss. Kaur would purchase the pen (Arnoldt, 2013).

Business scenario 2

According to the principles of contract, the contract was valid since the offer was made and both parties accepted the offer and were put in writing and the contract was initiated. In the process, Murphy threatened to terminate the contract against the promised offer, which is illegal according to the law and demanded additional payment, which Charles agreed to pay. But this was only to ensure the task was completed in time. According to a similar case where Girbert Steel accepted to supply steel in the construction of a number of apartments, which the University Construction was underlying in different locations.

The agreed prices were as follows for the different grades $159 and $153 per tone (Dawisha, 2011). The initial two constructions was completed at the price, while the price of the steel increased before the third construction to $156 and $165 for every tone. During the construction Gilbert Construction approached the university through a new written contract indicating the new prices. The University Construction maintained to pay their initial amount, which resulted in the Gilbert Steel to take a legal action. The court later concluded that there were no considerations that existed for promise to pay higher rates and the oral agreements fails on that basis. Therefore, a similar applies in the case (Kennerly, 2010).

The impact of different types of contract

Bilateral contract

The bilateral contract exists in a business where the transaction is between one or two people for instance, sale of good. In the bilateral contract both parties make promises and they are bound to abide by terms of agreement. Party making promise is the promisor while the other party is promisee. An excellent example of the bilateral contract is when Joe promised to put up for sale her property to Peter the bilateral contract is compulsory both parties since they have both offered considerations for accepting terms (Arbatov, 2012). This kind of contract result in a successful business transaction since both of them are bound by the agreements that they both created and accepted, hence no everyone must abound by it and failure to which legal actions are in acted.

Specialty contract

The specialty contract is the formal contract in law, which is used by a range of business transactions. It is mostly used in the lease of the property and usually in the partnership. In the contract, both parties, which are involved, must be sign a written document to indicate they have entered in the contract. The parties which are involved are required to encompass a copy of written document as the evidence, which are the in the contract (Erkan, 2011).

Simple contract

In each contract, it essential to maintain any contract in form of the written form in order the contract will be comprehensible to both groups which are entering the contract. In case of breach of the contract by any of the two parties, suing for the damages is actually possible. For instance, if Y and X are in the written agreement to execute business and they have indicated in written simple contract the parties are obligated to comply with the agreement. And in case of Y fails to comply with the agreement, it can be sued in the court of law for the damages (Egenhofer, 2013).

Verbal contract

The verbal contract is the agreed upon through face to face or either through the telephone conversation although it is not properly documented. For instance, there is no evidence for the verbal contract. In the verbal contract parties involved does encompass any proof to indicate that there was any contract between the parties. The verbal contract is a case whereby two or more parties make agreements, which are not formalized with any written document (Borodina, 2012). There are no proper evidence in case of breach of contract since there are no written documents therefore, creates disputes.

Written contract

The written contract is the document indicating all the terms as well as the conditions, which the parties have entered into detail and fully signed by both parties. Individuals, organizations and business can enter a written contract with one another. All the terms as well as the conditions of the valid contract must be included in the contract and signed by all the parties involved. The contract is prepared as well as submitted by a licensed lawyer who ensures that terms and the conditions of the contract are clearly made before the singing of the treaty. The written contract protects all the parties involved from the breach of contract. When a single party fails to execute its duties as indicated in the contract then the other party is valid to take legal action against the party (Bremmer, 2012).

Terms in contract

Contracts under Seal

Traditionally, any contract was not legally enforceable without the stamp seal. The seal usually represented that parties intended the agreement to contain the legal consequences. No legal detriment or benefit to any of the parties was necessary, as the seal represented the solemn acceptance of legal consequences and effects of the agreement. All the contracts were requisite to be under the seal to be considered valid, although the seal has recently lost some if not all the effects through statute in the most jurisdictions [ (Kennerly, 2010) ].

Express Contracts

In the express contract, parties utter the terms in writing or orally, at time of its creation. Usually, there is a oral or written offer, which is accepted by the party to whom the offers are made in a approach, which explicitly demonstrates the consent of its terms.

Implied Contracts

Even though the contracts, which are implied in reality as well as the contracts implied in the law are both declared as implied contracts, the factual implied contract entails compulsion arising from the mutual agreement as well as the intent to promise that have not been articulated in words. Actually, it is confusing to indicate as an implied contract one, which is implied in the law since a contract implied in the law lacks requisites of the true contract. The expression quasi-contract can be described as a more accurate designation of the contracts implied in the law. The implied contracts are as the binding as the express contracts.

The implied contracts usually depend on the substance for its continuation; hence for the implied contract to crop up there must be a conduct of the party or some act, for them to be bound [ (Dawisha, 2011) ]. In the real sense, the contract implied is not expressed through the parties but instead it is suggested from the basis and the circumstances, which indicate the mutual intention to the contract.

The circumstances exists in that, according to ordinary course of dealing as well as common understanding, express such an intent, which is sufficient to sustain a finding of the implied contract. The contracts implied in the law are distinguishable in a manner that they are not predicated o assent of parties, but instead exist despite the assent. Implication of the mutual agreement must be sensible deduction from the entire circumstances as well as relations, which contemplates parties when they engage in a contract or that are essential to effectuate their objective. No implied pledge will subsist in the relations between the persons or parties prevent inference of a contract [ (Borodina, 2012) ].

The of Contrast contractual liability with tort liability

The torts are the wrongful acts which are causing loss, harm or damage to another’s property, body or legal right that caused by the breach of duty owed under the statute. Tort is the civil wrong, and wronged individual sues in the civil court for injunction against repetition or the compensation. Alternatively, contractual liability comes to existence only when there is a clear contract, which voluntary binds the parties together. The tort law similarly to contractual law applies to all the parties or individuals (Arbatov, 2012). The law of contract and tort are classified as part of law obligation although the law of tort is active to everyone who is relevant to, whereas in the law of the contract or in the trusts compulsion is voluntary assumed. The principle difference between tortuous and contractual obligations is results of the agreements, whereas the second is result of the law. The contract reparations are based on the losses expected, whereas the tort damages are the compensatory. Tort arises when duty is violated by tort feasor which exists in the law (Arnoldt, 2013).

Nature of the liability in negligence

According to the liability in negligence reasonableness standard is determining whether the negligence liability ought to be imposed on particular persons conduct when such behavior results in an injury. According to the reasonableness standard, the peril reasonably to be apparent decides the legal obligation to be obeyed. The perceived risk assumes that general scope of risk and danger of injury is predictable. Within the context, a predictable risk of injury is actually not a simple possibility, however a probability. Based on the personal experience or common understanding of the reasonable individual similarly situated, a common set of conditions have caused injury previously and are liable to cause future injuries, until particular precautions are undertaken.

In the negligence liability, one is only required realistically foresee than the injury that might result from the perilous condition on premises [ (Erkan, 2011) ]. Consequently, the specific manner in which injury occurs requires not being necessary foreseen. Alternatively, plaintiff’s injury ought to occur within general range of danger attributed to the defendant’s negligent conduct. In the real sense, the defendants are entitled to know or the reasonable persons in related circumstances would recognize that such negligent behavior could result in this kind of injury. Negligence is the conduct encompassing an unreasonable peril of harm. In determining whether any precise risk is unreasonable, the courts will reflect on the social interests concerned [ (Dawisha, 2011) ].

Vicariously liable

Vicarious liability is referred to a situation where an individual is held responsible for actions or omissions of another individual. For instance, in the workplace situation, the employer can be liable for acts or the faux pas of its workers, on condition that it can be proofed that the act took place in course of employment. Most of the employers are not aware that they can held responsible for the range of actions that are committed by the workers in course of executing their duties and this might include harassment as well as bullying, discriminatory acts, violent and breach of copyright among others [ (Kennerly, 2010) ]. It is possible to take to legal actions against the employer for the actions of the behavior of third parties if these parties are deemed to be under control of employer.

The principle query in case of vicarious liability is whether worker was acting in the individual capacity or in course of the duty execution, which is mostly complex to determine. The liability does not also extinct after the worker leaves the organization since the law states that action can be taken against the employer even if the individual in question does not further work in the organization. Therefore, the practical steps that the employers can take to avoid the vicarious liability for the employees acts is through taking sensible steps to ensures such omissions or acts does not occur [ (Egenhofer, 2013) ]

Works Cited
Arbatov, A. G. (2012). Basic contract law for paralegals. Armonk: NY Sharpe press. Arnoldt, S. (2013). Business law today. München: GRIN Verlag GmbH: GRIN Verlag GmbH pess. Borodina, S. D. (2012). The legal environment of business. New york: McGraw-Hill. Bremmer, I. :. (2012). West’s legal environment of business. Oxford: Oxford university press. Dawisha, k. (2011). Business law. Cambridge: Cambridge university press. Egenhofer, C. (2013). Company Law Review. Europe: Centre for European Policy Studies.
Erkan, M. (2011). impacts of different contracts . Alphen aan den Rijn: Kluwer Law International press. Kennerly, M. (2010). Basis of Vicarious Liability. Paris: OECD press.

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