Elements of a Contract

Topics: Contract, Void, Common law Pages: 5 (1554 words) Published: February 10, 2014
Abstract

Blum (2011) provide a relatively simple explanation of the complexities of a contract by describing it as an exchange relationship that is established orally or in written form that is made between two or more individuals, contains at least one promise, and is recognized as a legally binding agreement (Blum, 2011). The focus of this written assignment examines the elements that must exist for a contract agreement to be considered enforceable by law. The assignment will examine the following contractual elements including: (a) offers, (b) acceptance, (c) legal consideration, (d) capacity, and (e) legality of purpose. In addition, the assignment will identify the components that govern the parameters of common law and the Uniform Commercial Code (UCC). For the purpose of this study, a fictitious scenario (myself) has been hired and offered a two year contract as the head chef of the Fabulous Hotel Company. As a sample to illustrate contractual issues that individuals may encounter, the agreement contains a non-compete clause that will serve to provide a closer analysis of specific contractual obligations and restrictions. The findings of this assignment will conclude that the courts are not able to successfully arbitrate disputes without an essential contractual agreement to define the terms that make it enforceable by law.

The Anatomy of Contracts
Without agreements spelled out in contracts, the courts are unable to adjudicate promises between individuals. In today’s business environment, many professionals find themselves dealing with contractual issues in one way or another. Blum (2011) defined a contract as an exchange relationship that is agreed upon and is recognized as enforceable by law. A contract must consist of the following elements: (a) an oral or written agreement between two or more people, (b) an exchange relationship, (c) at least one clearly defined promise; and (d) the enforcement of the law (Blum, 2011). Undoubtedly, the most significant element of any contract is that it is a voluntary, consensual relationship. The contract is created because the parties are doing so free of will, with the intent of being bound by an agreement that outlines the parameters of their relationship. Seaquist (2012) states that for a contract to be considered enforceable other essentials components must also exist. These include: (a) an offer, (b) acceptance of the offer, (c) consideration of the agreed upon exchange of energy, (d) the mental state or legal ability of the parties entering into the agreement, and (e) that the transfer of goods or services are conducted within the legal framework of the law (Seaquist, 2012). Without these elements, a contract is unenforceable. Contract Terms and Conditions

Contracts that are recognized by the law must contain at least one promise. It is important for people to understand that there are certain laws that govern legal contracts. For example, contract law is either governed by common law or the Uniform Commercial Code (UCC). Seaquist (2012) states, that if the agreement involves the sales of goods, it is governed by the UCC regardless of whether the individuals involved are merchants or not. If on the other hand, the contract involves anything other than the sales of goods like real estate purchases, development, insurance, or professional services, then the contract is governed by common law. There are exceptions, like when a company is hired to build a restaurant where materials and services are required to complete the project. In order to determine which law governs this kind of contract, the courts rely on which is greater: the cost of goods or the cost of services. If the answer is the cost of goods, then it falls under UCC laws; if the cost of services is greater, then the contract would fall under the regulations of common law policies. Contracts are recognized by the law and define the terms of an exchange relationship. Eisenberg (2002) pointed out that...

References: Blum, B. (2011). Contracts: Examples and explanations (Fifth ed.). New York, NY:
Aspen Publishers.
Eisenberg, M. (2002). Gilbert law summaries on contracts (14th ed.). Dallas, TX:
The Barbri Group.
Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education,
Inc.
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