Introduction: Page One
Offer: Page Two
Acceptance: Page Three
Intention to create legal relations: Page Four
Consideration: Page Five
Privity: Page Five
Capacity: Page Six
Bilateral/Unilateral/Express/Implied: Page Seven
Condition/Warranty/Anticipatory Breach: Page Eight
Exclusion clause: Page Nine
Applying the law on business scenarios: Page 10-11
Applying the law on terms in contract: 12
Evaluate the terms: Page 13
ASPECts of contract and negligence for business
LO1: Understand the essential elements of a valid contract in a business context
Explain the importance of the essential elements required for the formation of a valid contract
Contract is defined as an agreement creating obligations which are enforceable by the law where there is a promise to perform the required action in return for something of value. Contracts are important in business related situations as it sets out the expectation required for each party. An agreement can be written which is summarised to a document typically requiring each party to sign in order to convey their agreement; written contracts are easy to enforce than oral contracts. Benefits of a written agreement include prevention of confusion as whenever in doubt can easily refer to the legal document. Also encouraging consistency as each party should be aware of the action they’re required to perform. Communication via email still amounts to a contract as long as the essential elements are met; offer and acceptance, intention to create legal relations and consideration. Fast paced organisations may prefer to use email rather than written as postal service can take quite a while.
In order for the contract to be considered valid and effective there are some requirements which are needed to be met. The main elements are:
Offer: An offer can take any form, whether it is a letter, email or even a newspaper. An offer is defined as an indication of contracting on certain terms to contract on certain terms with the intention of forming a legally binding agreement between two or more parties. Examples of offers include: reward posters, advertisements and promotional campaigns. There are important rules about offers which create validity: the offer must be certain in other words the offer must be clear and create no ambiguity; a promise to pay an extra £5 ‘if the horse was lucky’ was considered too vague to amount to an offer. The offer must be communicated in other words; a person cannot accept what they’re not aware of. A theoretical example: Vicky’s cat has gone missing so has gone out around the town and placed posters everywhere; Daniel finds the cat and returns it. However on his walk home he noticed the posters and the description matched the pet he found, so he returns to the house demanding the reward – technically Vicky is not obliged to give him the reward as Daniel had never received the offer so therefore was unable to accept it.
Very important to be able to make a distinction between an offer and an invitation to treat which actually invites one party to step up and initiate the offer. In Fisher V Bell the court failed to secure a conviction under the Offensive Weapons Act 1959 – defendant had placed flick knives in the window along with a price tag, court had dismissed the charge and decided that there had been no offence committed and this simply constitutes an invitation to treat. A similar case is Pharmaceutical Society of Great Britain v Boots where court it was decided that goods displayed on shelves in supermarkets were merely an invitation to treat and judges the court had also decided that the contract had been created once customers collect items from displays and proceed to pay for them at the checkouts.
An offer can also be brought to an end in a number of ways such as a counter-offer which is simply responding to an offer with another offer. A case which illustrates the principle of a counter offer is Hyde V Wrench where Wrench offered to sell his…