CONTRACT LAW

Understanding Essential Elements of a Contract within Business Context



Understanding Essential Elements of a Contract within Business Context

Introduction

Contracts are agreements between individuals or legal entities in which one party agrees to provide a service or provide a good return for the payment of money or other goods or services (Blum, 2007, pp. 153-165). In order to explain essential elements of a contract there is a need to discuss “what is a valid contract?” A contract is defined as an agreement which is made between two parties or organizations which will be enforced by the courts. Different factors that affect these contracts must be clearly understood in making of a contract. The essential elements required making legal contract, the types of contracts and the terms used in a contract must be understood in the best way. This paper discusses all the important terms, practices and systems involved in contract particular in business context.

Discussion

Importance of Essential Elements Required for the Formation of Valid Contract

There are many kinds of contracts in business context such as sales contracts, general business contracts; employee's related contracts and leases etc. Though depending on the situation contracts might be verbal but it is always recommended that they should be in written form specifically in business context. These categories of written and verbal contracts fall under formal and informal contracts respectively. Today, technology is advancing and, each day brings new ideas and concepts affecting a contract. That is why it is important to understand different elements of contracts.

Importance of an Offer

An offer may be defined as a statement which allows an individual to enter in a contract with certain terms and conditions. The offer should be expressed in such a way that, it is easily accepted and, it should be cleared that a person who is offering is bound of all the terms and conditions after the offer is accepted (Benson, 2001, pp. 118-201). An offer is not just an invitation so; it should be treated more than an invitation. Offer may be called as a tentative promise because, promises are meant to be fulfilled.

Importance of Acceptance

Acceptance is the final expression of the intention of the offeree to enter into the contract conditions. It stands against the proposal, which is nothing else than a new offer. If we consider the first general rule of an offer, then acceptance of an offer is a reverse phenomenon of it as it says that, acceptance is when offer is accepted by an individual to whom it is offered (Blond and Petrillo, 2007, pp. 149-163). There are certain specific rules and recommendations for an acceptance to take place. If acceptance has to be verbal, then acceptance is made only when communicated either by telephone or direct communications with the one who made the offer (Frey & Frey, 2001, pp. 31-86). It is considered specific when the actions of the contractor emphasize its willingness to engage. If acceptance is made through a letter then, the time of acceptance is not necessarily ...