Business Law - Contract Law

Topics: Contract, Contract law, Tort Pages: 18 (5105 words) Published: June 4, 2013
3. Contract Law
“Is My Agreement an Enforceable Contract?”
The Law of Contract involves answering 4 questions:
(1) Is my agreement an enforceable contract?
Are all of the elements of a contract present.
(2) If so, what does it require me (and the other party) to do? - What “promises” have become terms of the contract.
(3) Can I get out of it (without paying some form of penalty)? - Was the formation of the contract defective in some way (ie were there any ‘vitiating elements’ present). (4) If not and I want to terminate it anyway, how can I – and what penalties might I incur? - How can contract come to an end and what remedies are available to a party not in default. Contract: An agreement which the law will enforce.

Requirements for Validity
In most cases – contracts do not have to be written. They can be: * written;
* partly written and partly oral;
* wholly oral; or
* implied from the way the parties behave.
Elements of a Contract
Offer AcceptanceConsiderationIntention to be bound
MutualityCapacityLegality
Offer: A promise to do (or not to do) something – together with an intention to be contractually bound on acceptance by the other party. OR A clear statement of the terms on which an offeror is prepared to be contractually bound. Offers can be made to: one person;an identified group of people; or the world at large.

Offers to the World at Large: Offers not directed to any specific person or persons but to anyone who becomes aware of them (other than those – if any – who are EXPRESSLY excluded from the offer). Invitations to Treat: Statements made to others inviting THEM to make you an offer. Examples: advertisements and circulars;displays of goods in shops; calls for bids at auctions; and calls for tenders.

PUFF: Obviously far-fetched statements made to induce a contract but not intended to form part of the contractual obligation. Termination of Offers: Revocation by the offeror;Rejection by the offeree; Lapse of time;Death of a party;Change of circumstances;

Failure of a condition;Supervening incapacity.
Acceptance: A FINAL and UNQUALIFIED assent to the terms of an offer (ie the offeree agrees to deal on EXACTLY the SAME terms that the offeror offered). Who May Accept? Only those persons: To whom the offer was intended; and To whom it was communicated.

What Can Be Accepted? What was offered (without any additions, deletions or conditions). IF any alteration is made the offeree is not accepting – he or she is making a counter-offer. Counter-offer: Rejects the original offer and substitutes a new offer for it. Rules of Acceptance: Acceptance generally must be COMMUNICATED to be effective. Such communications may be by WORDS or ACTIONS.

SILENCE cannot be STIPULATED as the required means of acceptance. An offeror can WAIVE his or her right to communication of acceptance. The offeror can REQUIRE acceptance to be in a prescribed manner. Revocation of Acceptance: An acceptance can be revoked IF the revocation comes to the offeror’s attention before he or she receives the acceptance. Intention To Be Bound:What separates a mere agreement from a contract is the parties’ intention to be bound IF agreement is reached. Rules for Intention To Be Bound:With all agreements determine the parties’ intention objectively – looking at both the agreement and at all of the surrounding circumstances. * The old “presumptions” no longer apply-BUT it is still probable that: * purely SOCIAL or DOMESTIC agreements will not involve the required intention to create a LEGALLY ENFORCEABLE agreement; but * BUSINESS or COMMERCIAL agreements will probably involve that intention. Consideration: The price paid by the promisee for the promisor’s promise. Consideration can take the form of either: a BENEFIT to the promisor;

Or a DETRIMENT to the promisee incurred at the promisor’s request. Consideration can be: executory; executed;BUT NOT past....
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