INTRODUCTION TO CONTRACT ASPECTS
The business or personal contracts in English law are legally binding agreements between two parties who agrees to comply with the obligations that are set in the terms and conditions of the contract through a mutual consent. There are different types of contract formation which depends on the availability of two parties. The following report is carried out to understand the significance of essential elements of contract and impact of different types of contract in legal terms. The report also includes case examples to explain the various liabilities in contract.
TASK 1: ESSENTIAL ELEMENTS OF A VALID CONTRACT
1.1 Importance of essential elements in the formation of a valid contract
A contract is considered as an agreement that gives rise to set of obligations which are enforced by the law to be fulfilled by both parties. The basic elements of contract are agreement, contractual intention and consideration which requires to be fulfilled with the valid formation of contract in legal terms. The significance of elements are described as follows -
Offer - It is the willingness of one party to enter into contract on specified terms with the other. It is made with an intention that it is binding after being accepted by the party or person to whom it is addressed. The offer can be made to a single person or may be group of people as well as the business or world (Mondal, 2014).
Acceptance - In order to complete the agreement, it is must that the offer is accepted in its original form. The acceptance from the other party can be in form of writing or act. But in case, if the other party give additional terms and conditions on top of the original offer, it is then considered as counter offer which discards the original offer.
Consideration - The consideration element refers that each party in the contract agrees or promises to do something in return. A valuable consideration consists of interest, profits, right accruing to other party or some form of losses that are suffered by the other party ((Thomas v Thomas)(1842) 2 QB 851). It is important that consideration must be sufficient to put forward in order to legally recognized by the court (Riley, 2012).
Contractual Intention – It is already mentioned in the acceptance element that offer must be made with an intention that it will be binding upon acceptance. It is here essential that all parties in agreement have an intention to enter into legal relations. It can be said that parties agree to accept the legal consequences that are attached with the agreements. In other words, parties are very well aware of the fact that agreement is legally binding with recourse to external party i.e. court. It is thus required that parties of the agreement must intend to enter into legally binding agreement. This may be rarely considered explicitly but usually concluded from the situations in which the agreement has been made (Appleman, Appleman and Holmes, 2013).
1.2 Impact of different types of contract
Contract formation can take many forms depending on the consent and mutual agreement between the parties.
Face to Face Contract - This form takes place when both parties of the contract are present in front of each other and agrees to the terms and conditions to enter into legally binding agreement (Deaki and et. al., 2007).
Written Contract - The terms and conditions of the contract are written in precise form and is understood and signed by both the parties. The agreement includes terms, condition, clauses of the
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