Business Law – Outcome 2 (Law of Contract)
Identify and describe the essential elements of a contract
There are 3 essential elements in a contract:
* There must be an agreement on all material aspects (Consensus in idem) Both or all parties in a contract must have the same understanding of all terms within the contract. To reach and consensus in idem, any acceptance must meet one of the offers made. If a party makes changes to the original offer then this is considered a conditional offer. This is seen as a new offer and must be accepted for a contract to exist. If the conditional offer is accepted then this removes the original offer. * There must be at least 2 contracting parties:
In order for a contract to exist there must be at least 2 parties as it is impossible to form a legally binding contract with only one person. Both or all parties are required to have an equal understanding of all terms, responsibilities and obligations within the contract. * Legal obligations and rights must be made and all parties must agree to be legally bound to the agreement: We must have an intention that we will be legally bound by any contract or agreement that we enter into. In order for any contract to be deemed legal there must be some material loss or gain involved. Personal or social obligations are not usually classed as legal obligations. Any agreement that involves betting or gaming cannot be enforced under Scots Law. Any agreement based on the result of a bet is regarded as Sponsiones Ludricae. Simply put, Sponsiones Ludicrae means that the bet was a waste of time and effort which should be put to better use. The Process of a contract formation.
A contract is formed between 2 or more parties when all offers and counter offers have been heard and eventually agreed upon. In order for a legally binding contract to be formed, both parties must: * Reach a Consensus in idem
* Be 18 years of age or older in accordance with The Age of Legal Capacity...
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