Contract is the written or spoken agreement which is formulated with an aim to form the legal relationship between parties (Meaning of contract, 2016). For any business relationship, contract plays a significant role. This is because, by formulating an agreement, parties can save themselves from the losses which may happen when any party to the contract fails to perform which they have decided through mutual agreement. The present report is based upon different types of case scenarios. Thus, in this context, report will depict the importance of different essential elements of the contract. Furthermore, the report will also showcase detailed explanation regarding different concepts which are associated with the contract.
1.1 Explaining The Importance Of Essential Elements Of Contract
Contract is a legal binding between parties. However, with an aim to formulate a valid contract, respective parties will have to satisfy different essential elements of contract. Thus, detailed explanation about the same is depicted as below:
Offer And Acceptance
It is the first element of contract or it can also be said that it is the initiation phase of contract. Here, any contract starts with the offer which is being given by one party to another. Here, the offer which party gives must be clear and definite (Akintoye, Renukappa and Lal, 2012). This is because, if the given thing will be found as absent, then in this situation, the offer given by party will not considered to be appropriate. However, there are certain circumstances when offer will lapse. These circumstances could be time, when parties to the contract will have to accept the contract or it gets expire. In addition to this, offer as being made by one party needs to be accepted by other party. This is because; if this is will not happen then in this situation, valid contract cannot be formed.
Intention To Get Entry Into Legal Relationship
This second element of valid contract depict that parties must have intention to enter into contractual relationship. Thus, the given intention of party depicts that they are ready to fulfil all the terms and conditions of the