Aspects of Contract and Negligence for Business (Legal Issues)



Aspects of Contract and Negligence for Business (Legal Issues)

Task 1

Essential Elements of a Valid Contract and Their Importance

Agreements and contract are two different things; all the contracts are agreements but not all the agreements are contracts. Only those agreements which are enforceable at law are contracts. A contract must possess certain essential elements which are set by the law.

Lawful Offer and Acceptance

For establishing a valid contract, first step is to make a lawful offer by one party to another with a view to obtain the acceptance of another party to whom offer is made. Then it requires a lawful acceptance from the other party to whom offer is made. When that party signifies his assent thereof the proposal is said to be accepted. This is important because it consist valid intention and promise by both the parties entering into a contract (Kumar, 2012).

Intention of Creating a Legal Relationship

Secondly, Parties must have intention of creating a legal relationship with each other, if it isn't the case then there will not be a valid contract. Agreements of domestic or social nature do not contemplate legal relations. For creating a valid contract this element is important because it provides the basis for legal relation between parties (Kumar, 2012).

Consideration

A valid contract must have the consideration; that is the price for which a promise of another party is brought. It is important because a contract needs recompense given by the party contracting with another (Kumar, 2012).

Competent Parties

The parties involved in a contract must have capacity to enter into an agreement. The persons who are miners, having unsound mind, and disqualified by the law to which they are subject, all of these are incompetent to enter into a valid contract (Kumar, 2012).

Free Consent

Free Consent is one of the important elements, which requires parties to agree upon the same things in the same sense. The consent is said to be free when it is not caused by mistake, coercion, fraud, undue influence, or misrepresentation (Kumar, 2012).

Lawful Object

The object of the contract must need to be valid i.e. should not be unlawful. This element is important it involves lawfulness of the object and thus, avoid any dealing of unlawful objects.

Certainty of Meaning

Further, a contract must be clear and should not involve any vagueness. It is important in order to develop certainty of the meaning of contract (Kumar, 2012).

Possibility of Performance

The act should not be impossible legally or physically, it should be possible to enforce at law. It is important that contracts must be capable of performance (Kumar, 2012).

Not Declared to be Void or Illegal

A valid agreement is the one which is not void by any law in force in the country. This element is important to avoid any void agreement which has no legal sanctity (Kumar, 2012).

Legal Formalities

Finally, the laws don't states that the contract can be oral, but in certain cases law strictly insist for a written ...