Aspect Of Contract And Negligence In Business

Submitted By himbito
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Pages: 5

Legal aspect has always been important to any kind of business. Depending on the scale of operations we can see legal departments in large multinational corporations or small companies outsourcing lawyers or getting legal consultations. Knowledge of the law not only allows identifying what’s legal or illegal and not to break the law, it also helps securing the company from fraudulent or unlawful actions.
Aspect of Contract and Negligence
Task 1
Contracts are often used within our professional and personal lives; they allow business and individuals the ability to sell, purchase, or transfer services, property, and other rights.
Contract is an agreement which is made between two or more parties that create rights and obligations enforceable by law. A contract doesn’t need to be written. Even without realising people are making contract when buying a newspaper. Some contracts can be verbal or made by action. They are called simple contracts. There are two categories of the terms in a contract: conditions and warranties. Parties have to follow all the conditions in contracts. If fail to meet a term from the contract it will lead to a breach of the contract, so the party which is injured can claim a remedy. Breaching a condition might cause the rejection of a contract and claim of damages. If breaching a warranty, the injured party can claim a remedy of damages. A contract has to meet all the legal requirements to be legally binding. Key elements in the formation of a valid contract are: agreement (offer and acceptance), and consideration, intention to create legal relations, capacity, free consent, legal formalities, lawful object and the possibility of performance.
All of the elements are crucial and must exist in every contract, which the parties are signing. Demonstrating only one or two of these elements is not enough. Without any one of them, leads to the void of the contract between the two parties. An agreement is when an offer is made. An agreement is usually made between at least two parties. These parties can be a company and one person, two companies, or two people. Invitation to treat is the first part of the contract creation. It can be demonstrated by presenting goods in a shop, displaying cars in the showroom or with newspaper advertises. When one party is interested in any point, they make an offer. Then the options to the other party are: accepting the offer completely without conditions, rejecting that offer or proposing a counter-offer. If the offer is rejected or a counter offer is made it can lead to terminating the offer. The acceptance of the counter offer cancels the original agreement. (Gahir, 2009). The Carlill Vs. Carbolic Smoke Ball Co. case is an example how important the rules of the offer and acceptance are.
Consideration usually expresses either some advantage for the person who makes a promise (promisor) or some disadvantage to the person to whom the promise is made or both. Consideration is a promise in return for a promise. Consideration must be legal, clear and certain and not be illusory. As an example Car-Rex use sale of goods contract. They collect the price of the car as a consideration for selling the car to the buyer. The consideration doesn’t have to be adequate but must be sufficient. Court can’t be used for contract renegotiation. Parties who enter into a contract are treated equal by the court as they are equal by law.
Capacity shows if the parties fully understand the rights and obligations and can enter into legally binding contracts. Some groups are not able to enter into binding contract unless otherwise provided by law: Minors, drunkards, bankrupt, mentally incapacitated. To be binding on both parties and enforceable by law, the contract has to be legal. Court cannot enforce a contract with illegal subject. For example, the sale of illegal drugs is not enforceable by court. Also committing murder is not legal and an agreement to kill someone is not enforceable by