By: Tita Amalia V.
1. Jonathan and an international business transaction
Two parties reach agreement on the terms of the sale of a product from one party to the other. The agreement was written and signed by both parties in the presence of their lawyers.
a) Do the parties have a valid and enforceable contract?
Before a contract is formed, there must be agreement consisting of offer and acceptance, intention to form a contract, and consideration. Without these three elements, there is no contract.
The first element of the contract is agreement which means “The understanding between two or more legally competent individuals or entities about the rights and duties regarding their past or future performances and consideration as manifested by their language (oral or written) or by implication from other circumstances such as the usage of trade and the course of performance.” (YourDictionary.com 2011) British Steel Corp v Cleveland Bridge and Engineering Co Ltd shows how important to have an agreement in a contract. Agreement consists of an offer by one party (known as the offeror) to another party (known as the offeree) and the offeree’s acceptance of the offer without further negotiation. (4Lawschool.com) Fisher v Bell shows the requirement of offer and acceptance in the formation of a contract.
The second element is intention which means that both parties are willing to be bound by the terms of the agreement. Merritt v Merritt shows how important to create a legal relationship between parties or to show party’s intention to be legally bound by the law.
The third element is consideration which means something of value given by one party to the other. This may take many forms such as money, valuables, services rendered or agreement to not ask for a payment due in the future. Currie v Misa (1875) contain a famous statement giving the definition of consideration in English Law. Lush J said, “A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other...” This case law shows how important consideration in the formation of a contract.
There are some factors which affect validity of a contract. First, some contracts have to be made in a particular form. Second, There must be genuine consent means the validity of a contract may be affected if a person has been misled or even forced into a contract. Third, The parties to a contract should have legal capacity to enter into contracts. Fourth, a contract must be complete and precise in the terms. Fifth, courts will not enforce a contract deemed to be illegal or contrary to public policy. (Sukarja D. 2011)
In the case of Jonathan Muir’s transaction all three elements appear to be present. It can therefore be assumed that this deal constitutes as a valid contract because all the required elements exist. The first element of agreement was performed by Jonathan Muir and his client negotiating the terms of the deal and finally reaching an agreement which was written down and approved by their lawyers. The second element of intention was performed by both parties agreeing to be legally bound by signing the contract in the presence of their lawyers who had approved the terms of the contract. If there is no statement between the parties to show intention of a legal relationship, the court will assume that commercial agreements are always intended to be legally binding. Before the agreement made, it is not binding unless the parties intend to create legal relations and The parties must also have the capacity to do. Some of people (natural persons) or organisations (legal persons) are restricted from...