Essential elements of contract

A contract is an agreement which is made between two or more parties and which is binding in law. In order to be binding in law the agreement must include an offer and an acceptance of that offer. The parties must agree to contract on certain terms — that is, they must know what they are agreeing to (but they need not know that their agreement can be described in law as a contract). They must have intended to be legally bound; there would be no contract if, for example, they were just joking when they made the agreement. And valuable consideration must have been given by the person to whom a promise was made. In this case, consideration is a legal word to describe something a person has given, or done, or agreed not to do, when making the contract.

When a court is deciding if a contract has been made, it must consider all these elements. In common law countries, the judge will be guided by decisions made in previous cases. If the judge is dealing with a problem which has never arisen before he must make a decision based upon general legal principles, and this decision will become a precedent for other judges in similar cases in the future. The most important principle guiding a judge is whether a reasonable observer of the agreement would decide that it was a contract. But sometimes decisions seem very technical because lawyers try to explain why a decision has been made, even when that decision appears to be obvious common sense. Of course exact explanations are even more important when the decision does not appear to be common sense!

One principle of contract law mentioned above is that there must be offer and acceptance. An advertisement to sell something is not normally considered an offer. If I see an ad in a newspaper offering to sell a car, and I telephone the advertiser and agree to buy it, the seller is not obliged to sell it to me. This is because the law considers that the real offer is when I contact the seller asking to buy the car. The seller may then decide whether to accept or reject my offer. This is the reason a store does not have to sell you goods it displays for sale. (If the seller does accept then one important element of a contract has been made, and if the other elements exist the seller may have an obligation to the buyer).

Another principle is that the terms being offered and accepted must be certain. However, in the 1932 case of Hillas Company vs. Arcos it was decided that a reference to previous agreements or usual agreements might be certain enough.

One more principle mentioned above is that there is no contract if one of the parties did not intend to be legally bound. This is supported by a case decided in 1605 (Weeks vs. Tybald) when a man joked that he would pay money to any man who would marry his daughter.

What is valuable consideration? The principle behind this phrase is that the law will not enforce an empty promise. For example, if a man offers to wash my car for $10 and I accept, but he goes away and never washes it, I will probably not be able to make him keep his promise unless I have already paid the $10. This is because I have given no consideration: I have not done anything or lost anything because of his offer. However, even if I haven’t paid, I may still have given some kind of valuable consideration. For example, perhaps I left the car at home because of his offer to wash it and took a taxi to work. In this case a court might consider that there was an enforceable contract. As a result, I would be able to compel the man either to wash the car or to pay me the taxi fare I had spent.

One very important form of consideration is an agreement not to sue someone. For example, my neighbor makes so much noise that I cannot sleep at night. I have the right to take legal action against her (perhaps in tort) but I agree not to do so because she offers to take my mother on vacation to Hawaii. If she then fails to take my mother to Hawaii she is breaking a contract with me and I could take action against her either for breach of contract, or for the original tort. In making my choice I would consider which action would be of most benefit to me.

Most systems of law have similar requirements about offer and acceptance, legal intention, and consideration. They also consider the capacity of the contractors; that is, whether they were legally entitled to contract. In English law there are some special rules if one of the contracts is a company, rather that an individual, under the age — 44 of 18, or insane. Legal systems have rules for interpreting contracts in which one or more contractors made a mistake or was pressured or tricked into making an agreement, and rules for dealing with illegal contracts. For example, under English law a contractor cannot enforce an agreement against another party if the agreement was to commit a crime.

1. Define the word “contract” and its main elements.

2. Speak on the principles of contract law.

3. Explain “the capacity of the contractors”.

TEXT 3

Дата добавления: 2014-12-23