Understand the Legal Requirements for a Valid Contract

Topics: Contract, Contract law, Breach of contract Pages: 12 (4307 words) Published: December 4, 2012
Assignment 1 – Understanding the legal requirements for a valid contract

The essential elements for a contract, who apply in all cases, are:

1. Offer- made by offeror to the offeree , it is very important to distinguish this from invitation to treat ( which invites offers to be made) 2. Acceptance – Offeree accepts the offer that has been made. Rolls Royce Car 3. Consideration- Something of value passes between the two parties e.g.: A B Bag of Marbles 4. Intention to create legal relations – Domestic/ social agreement: not legally binding Commercial Agreement – legally binding 5. Capacity- Parties must be able to enter into a contract e.g. under 18, Mental Disorder, Alcoholics

Vitiating Factors – these factors could effect the validity of the contract. They make the contract VOID(contract has no legal impact and it will never exist) or VOIDABLE ( contract is valid up to the point at which is set aside).

1. Mistake- VOID e.g. the parties were at cross purposes about the subject matter of the contract. 2. Misrepresentation- VOIDABLE e.g. false statement of fact about an item ( fraudulent, negligent , innocent) 3. Duress- VOIDABLE e.g. Threat of violence or economic threat 4. Under Influence- VOIDABLE e.g. someone has influenced another to enter a contract no in their best interest.

Task 1

On 1st July Vicky advertised her car for sale in the magazine Car Mart. The advertisement read as follows:

For Sale
1992 Morgan Countryman. Offers around £10,000.
Write to PO Box 100, Car Mart Magazine.

On 2nd July Elliot posts a letter to the address in the advertisement in which he states the following:

“I have always wanted a Morgan and I will be happy to give you £10,000 for the car. Please telephone me on 8th July between 8p.m. and 9p.m. to let me know whether this is enough, failing which, I will assume that you have agreed to sell the vehicle to me”.

Vicky receives the letter on 6th July and writes the following entry in her diary:

“8th July – Ring Elliot at 8p.m. to agree car sale.” Vicky forgets to make the phone call. On 9th July Elliot meets an acquaintance of Vicky’s who says that Vicky has decided to sell

the car to Elliot. In the meantime Vicky has received a higher offer of £12,000 from Lucy and writes a letter to Elliot advising him that she has had a better offer for the car.

The Postal rule is a rule of contract law that makes an exception to the general rule that an acceptance is only created when communicated directly to the offeror. An acceptance is binding and the contract is said to be perfected when the acceptor places this acceptance in the mail box for return mail even if, in fact, it never reaches the offeror. An Invitation to treat as in the case of Partridge v Crittenden 1968, where it was held that an ‘advert in a magazine is an invitation to treat. There is no offer even though the word offer was used in the advert. There was not a contract between Elliot and Vicky , because the initial offer that Elliot made was not accepted with an answer by Vicky at any point. Therefore the car could not be considered as an item that belongs to Elliot. Even though her writing in her diary ‘8th July-Ring Elliot at 8pm to agree car sale. Is intention to create legal relations, but no-one knows about it so technically it does not apply. By writing the letter to Elliot saying his offer is now invalid as a better alternative. The case corresponds to the law precedent of Felthouse v Bindley from...
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