Essential elements of a valid contract
An agreement is an intentional and legal arrangement between several parties and a contract is an agreement which is enforceable in the court of law. The parties to a contract must have legal intention to legally bind the contract (Mckendrick, 2014).
An agreement to become enforceable, the parties must come to an understanding. The essential requisites of an agreement include offer, acceptance, certainty and a common legal intention to become legally bound by the agreement. The parties to an agreement must have legal capacity to enter into such agreement. Minors, intoxicated people and people of unsound mind are incapable to enter into an agreement subject to certain exceptions (Coelho, 2015).
The parties must enter into the agreement with consent and not forcefully or under coercion, undue influence, misrepresentation or fraudulently. The offer made by one party must be accepted by another party to the agreement. Such acceptance must be in accordance with the terms of the offer and is known as the mirror image rule. In case acceptance is not made in terms of the offer, such acceptance shall be considered as a counter offer and not an acceptance of the offer. A counteroffer implies the dismissal of the original offer (Serban et al., 2013)
Contracts may be bilateral or unilateral. A bilateral contract is a contract wherein the parties makes promises to another having legal intention to be legally bound by the contract. For instance- Allan makes an offer to sell his book to Bernard for three hundred dollars and he can claim the property title as guaranteed by the merchant. When parties enter into contract related to business transactions, such contract must include the prerequisites of a valid contract and the parties must fulfil the requisites in order to make the contract enforceable at law (Andrews, 2015).
In a unilateral contract, one of the parties is legally bound to perform his part of the contractual obligations and the other party is not bound to perform his obligations. For instance- a person may promise to pay $1000 to any person who finds his missing dog. A person accepting such offer need not communicate the acceptance of such offer instead the acceptance of the offer shall be implied from the conduct of the person. The acceptance of the offer is made when the person actually finds the missing dog (Coelho, 2015). When the dog is delivered to the offeror, the offeror is bound to perform his contractual obligation, that is, must make the payment of $1000.
Case study: Selling a textbook at Kaplan Higher Education
However, an offer is different from an invitation to treat. An invitation to treat is merely an invitation to make offer. For example- the goods displayed in a store self are considered as an invitation to treat. However, the concept of invitation to treat is subject to exceptions when it can be treated as an offer (Hunter, 2015).
Under certain circumstances, parties may enter into semi-contract. In law of contract, a semi-contract is not an agreement as the parties to such contracts are not required to compensate each other. Good examples of a semi-contract are the Quantum merit cases (O’Sullivan & Hilliard, 2016).
Allan and Damien entered into an agreement and Allan entered into another agreement with Bernard regarding an offer that was made by Allan. Allan posted an offer to sale a book on facebook which was accepted by both Damien and Bernard and both of them paid for the book offered for sale. Further, sister saw thw offer on Facebook too and inquired about the same from Allan. Allan agreed to sell the book to his sister. Now, legal intention is considered to be one of the essential elements of a valid contract as only when the parties to a contract have legal intention to bind the contract legally, the contract becomes enforceable n the court of law.
In business transactions, courts usually take into consideration the legal intention of the parties to a contract. However, the theory may not be applicable where social affairs apparently demonstrate an opposite theory. This may occur with the use of letters of point, honour procurements, comprehensive messages and other related mechanisms. This may take place despite the fact that a complete conclusion would not rely on the impression in connection with the report rather it would depend on the language used, the eliberte substances between the parties. Both Damien and Bernard expected that the offer made by Allan was a genuine offer.
The social-game approach: Mere presumption of having legal intention is not considered as honest legal intention of the parties that would make them legally bound by the contract. In case the parties to a contract are family members they are acceptable and legal results must not be expected from them.
In the mentioned scenario, the legal action in respect of Allan and her sister Charleen is not maintainable. Charleen approached Allan while he was asleep and Allan was dreaming of his favourite football team. His sister asked him that she wishes to purchase the book to which Allan agreed as he wanted to continue with his sleep and dream about his favourite football team.
Legal issues arising from the transactions
A mix-up is defined as a mistaken comprehension by one or more than one party to an agreement which may used as one of the grounds to dismiss the agreement. Judge made laws or precedents categorises three types of mix-up in contract, namely, regular mis-step, one-sided botch and common oversight.
A basic misstep takes place when both the parties to the agreement get mixed up relating to the terms of the agreement. Each and every term the parties are contracting to turns out to be something which is different from what is expected. The court considers such a mix-up in the event the terms of the agreement are found to be sensible. However, a mix-up agreement does not make the agreement voidable at the option of the parties that is such an agreement cannot be destructively influenced. In the case of Allan and his sister, the suit cannot be averted as Allan agreed to his sister who wished to buy the book offered for sale, and he has accepted the payment made by his sister for the book, as well.
A one-sided botch takes place when the only party to an agreement has mixed-up relating to the subject-matter of the agreement. The court shall consider such agreement unless it is established that the party to the agreement was aware of the mix-up and endeavoured to take advantage of the mistake (Treitel, 2003). An agreement may be treated as void if it is found that there is any flaw in the character of the party to the agreement. In the mentioned case Allan entered into an agreement with Bernard, Damien and his sister Charleen for the purpose of selling his book.
In the mentioned scenario, it is a case of misrepresentation. Allan posted on Facebook that he wishes to sell his book along with the original notes, however, later; he purchased the same book from the bookshop and sold it to Damien.
Distortion refers to false explanation of the actual fact that is made by one party to another party making such a spontaneous impact that it develops an understanding between the parties to an agreement. For instance- a merchandise vendor may deceive and falsely guarantee regarding the nature and quality of the commodities. Distorted notes which are relied upon at times, may amount to deception.
Distortion may be extortion in factum and misrepresentation in factum. Extortion in factum states whether the parties charging distortion were aware of the fact that they were entering into an agreement. However, if the parties were not aware that they were entering into an agreement, then such agreement shall be considered as a void agreement. On the other hand, Extortion in actuation is a form of distortion wherein attempts are made to induce the partie to enter into an agreement McKendrick, 2014). Further, Deception regarding the material reality, that is, if the parties entering into an agreement which they would not have entered into had they was aware of the reality, then such agreement shall be considered as a voidable agreement.
As observed in the given scenario, it is apparent that there is an instance of distortion. Explanations of assessment are not considered as an expression of certainty relating to misrepresentation. If either party claims a fundamental evidence for the examined point, then the likelihood of an announcement to be made by the court regarding the emotions of the party is considered to be high.
There are four different ways in which a contract may be set aside. An agreement may be voidable, void, incapacity or unenforceable. An agreement is considered as void which implies that the agreement is unenforceable at law. The parties to an agreement may treat an agreement to be void if either or both the parties declare that they are incapable to perform their obligations. An agreement becomes unenforceable when it is not a valid agreement and incapability implies termination of an agreement on court’s request when the agreement fails to comply with the legal requirements (McKendrick, 2014).
Revocation of an agreement implies setting aside of the agreement (Li, 2014). In the mentioned scenario, Allan may avert the initial contract with Damien and Bernard by giving them their money back and collecting his book from Bernard. However, Allan has committed a breach of contract as he made an offer to sale his book which he knew, was available for free at school.
The breach committed by Allan may give rise to a conflict. Conflict may occur when the interests of one or more parties intervenes with one another. In the given scenario, Allan has entered into three different agreements with Bernard, Damien and Charleen. The contentions may be averted in the following ways:
Under this method, either of the conflicting parties must maintain distance from each other or simply withdraw (Poole, 2016). The advantage of this method is that it saves time which could be spent on other important exercises. If the conflict is resolved in this method, then Damien, Charleen, Bernard will get time to concentrate on their studies but the only disadvantage is that it would affect the reputation of Allan.
Under this method, Allan may try to ease the circumstances by admitting his mistake and returning their money and take his book back too. This method shall enable Allan to ease the circumstances and move on as if no issue existed. This method shall help Allan to maintain his goodwill but this method may also give others an opportunity to take advantage of the opportunity.
Under this method, Allan may request all the three parties, that is, Bernard, Damien and Charleen, to state their respective contentions. After hearing their contentions, Allan may make attempts to adopt the exchange approach where he shall fulfil the requirements of all the three parties and satisfy them. Thereafter, he shall be exempted from the liability of committing the breach of the contract. The advantage of this method is that it is a time-saving method and would provide a speedy resolution to the concerned issues. This method shall enable all the parties to calm down and reduce their anxiety. However, the method also suffers from certain disadvantages as well. Under this method, the parties to the agreement may come up with new contentions any time they wishes to which Allan would have to fulfil if he wishes to resolve the conflict. Moreover, the parties to the agreement shall not trust Allan in the future and he may lose the faith hiss friends and his sister had on him, forever. However, Allan may try to make settlement with the parties by admitting his mistake and paying their money back.
Conclusion:
Allan has committed a breach of contract by providing improper information contrary to what he had posted on the Facebook page. Therefore, it is understood that when the parties to a contract do not comply with the legal requirements of a valid contract or when they fail to perform their contractual obligations, it may give arise to various forms of conflicts or may make the contract unenforceable in the court of law.
Reference:
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Li, R. Y. M. (2014). Law, Economics and Finance of the Real Estate Market: A Perspective of Hong Kong and Singapore. Springer Science & Business Media.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK)
O’Sullivan, J., & Hilliard, J. (2016). The law of contract. Oxford University Press.
Poole, J. (2012). Casebook on contract law. Oxford University Press.
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Serban, O., Pauchet, A., Rogozan, A., &Pecuchet, J. P. (2013, September). Modelling context to solve conflicts in SentiWordNet. In Affective Computing and Intelligent Interaction (ACII), 2013 Humaine Association Conference on (pp. 393-398).
Treitel, G. H. (2003). The law of contract. Sweet & Maxwell.
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