Business Law 420 Week 3 Assignment

Topics: Contract, Contract law, Breach of contract Pages: 2 (639 words) Published: March 28, 2012
An agreement must contain four essential ingredients to be regarded as a contract. These four elements are offer, acceptance, Intention of legal consequences, and consideration. If any one of them is missing, the agreement will not be legally binding. An offer is defined as the manifestation of the “willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it.” There must be a definite, clearly stated offer to do something. An offer does not include ball park estimates, requests for proposals, expressions of interest, or letters of intent. An offer will lapse when the time for acceptance expires, if the offer is withdrawn before it is accepted, or after a reasonable time in the circumstances (generally the greater the value of the contract, the longer the life of the offer). Only what is offered can be accepted. This means that the offer must be accepted exactly as offered without conditions. If any new terms are suggested this is regarded as a counter offer which can be accepted or rejected. There can be many offers and counter offers before there is an agreement. It is not important who makes the final offer, it is the acceptance of that offer that brings the negotiations to an end by establishing the terms and conditions of the contract. Acceptance can be given verbally, in writing, or inferred by action which clearly indicates acceptance (performance of the contract). In any case, the acceptance must conform to the method prescribed by the offerer for it to be effective. A contract requires that the parties intend to enter into a legally binding agreement. That is, the parties entering into the contract must intend to create legal relations and must understand that the agreement can be enforced by law. The intention to create legal relations is presumed, so the contract doesn't have to expressly state that you understand and intend legal consequences to follow. If...
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