Examples:
Sale and purchase contract
Employment contract
Lease contract
Contract v agreement
A contract is a legally binding agreement which is enforceable in a court of law
An agreement is not necessarily a contract
Elements of a valid contract
Offer
- A legally binding promise made by one party (the offeror) to another party (the offeree)
Offers need to be distinguished from non-offers such as invitations to treat
An invitation to treat is not an offer because it represents only an invitation to make an offer
Advertisements are normally only invitations to treat
Acceptance
An important element in the formation of a legally binding agreement is acceptance
Unilateral contracts – Acceptance takes the form of undertaking the act by performance
Bilateral contracts – Acceptance occurs with a verbal or written response
The offeree must accept with full knowledge of the offer; any attempted acceptance made in ignorance of the offer will not be valid
Consideration
Consideration is what each contracting party bargains for and gives in exchange for the return promise or performance of the other party
Eg money
Formal Contracts
No need for consideration as the contract is valid because of its form such as deeds
Simple Contracts
Valuable consideration is required for the agreement to become a contract
Consideration must not be past
Past consideration occurs where a promise is given after an act has been performed
Consideration must be:
Present (executed) consideration which is an act done in return for a promise
Future (executory) consideration where the parties exchange promises. Each promise being the consideration for the other
Intention to create legal relations
Is considered to be a necessary element of every legally binding agreement in order to distinguish from social and domestic arrangements that are considered not to form legally binding agreements
Commercial and business agreements
There is a presumption that the parties intend to create legal relations
Usually money is involved in commercial and business agreements and the courts are more likely to find the necessary intention to create legal relations
The presumption may be rebutted when there is proof that one of the parties expressly excluded legal relations such as
Express use of the phrase “this arrangement is not intended to be legally binding”
Agreement to be binding in “honour only”
Certainty of terms
There needs to be sufficient completeness and clarity before a contract can be enforced
Courts will not enforce vague or incomplete agreements
Contracts may be rendered unenforceable because of a lack of certainty of terms
Since there are important consequences, courts have developed a number of test to clarify uncertain terms aiming at upholding the validity of the agreement
In attempting to determine whether a term in a contract is sufficient certain, the courts have developed the following rules
Factual matrix of the case
Upholding the validity of the agreement within reason
Characteristics of the agreement
Third parties
External aids and industry benchmarks
Illusory terms
The Contract Part 2 – The Parties
Capacity
Certain vulnerable individuals may not have the required legal capacity to contract
Minors
Persons below the age of 18
Contracts with minors fall within the following categories
Valid contracts
Voidable contracts
Void contracts
Drunkards
Persons are affected by alcohol or other substances
Mentally incapacitated, unsound mind
The person who has contracted with the drunkard will be deemed to have taken advantage of a person with insufficient legal capacity
Bankrupts
Do no enjoy full legal powers to contract
Restricted by the Bankruptcy Act 1966 (Cth)
Voidable at the option of the bankrupt
Can reaffirm the contract if they wish, after they have been discharged from bankruptcy
Mentally incapacitated
- Voidable at the option of the party who is mentally incapacitated if
Unsound mind that they did
Outline 1. Recitals. 2. Employment. 3. Duties. 4. Term. 5. Compensation. Employer Information Name Address Phone Number Fax Number Email Performer Information Stage or Performance Name Number of Performers Name of First Performer Who has contract signing authority? Performer Contact Information Address Phone Number Fax Number Email Venue Information Venue Name Address Phone Number Performance Performance Description Performance Team Performance Date Setup Date Set Up Time Number of Sets on…
Individual Project Five Riana Fonseca February 2, 2012 The elements of a contract are having parties make an offer, there is a legal purpose and there is an acceptance then a consideration. In order to have a contract, there must be some people to make a contract with, whether it is person-to-person, business-to-business or person to business, there must be two collective parties to offer and a party to accept or deny the contract. A legal purpose simply means as the name suggests, that the contract’s…
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WC 390 What elements are necessary to form a legally enforceable contract? According to the law, there are 6 essential elements, an offer and acceptance, competent parties who have the legal capacity to contract, legality of purpose, mutual agreement, and consideration, and proper form. (Liuzzo) An offer is an expression and willingness by one of the parties to contact on a certain item with another party with the clear understanding that the contact will be binding upon acceptance by the party…
Brandon Dudas Professor Perales Lit 120 29 August 2013 A Contract with God From the initial first few pages, I felt that maybe this way just old literature and the story itself was just going be some fictional story. But as I grew deeper and deeper in the book, I noticed that this story actually pertains to the modern world very much so. There are so many people today like Mr. Hersh; who go through a rough time, finally find God and make these covenants with him. They assume that if they do…
Formation of a contract Contracts are agreements that are legally binding. They can be simple contracts or formal contracts. Formal contracts don’t normally involve any consideration whereas simple contracts can be written or oral and unilateral or bilateral. Any contract has a few essential elements: * Intention * Agreement (offer and acceptance) * Consideration. For a contract to be valid it must * Be made with parties that have legal capacity * Be made with genuine consent…
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