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Thursday, 8 June 2017

Introduction to Business Law: The Essentials of a Contract

Essential Points in Contract
       A contract is a legally binding agreement
       A contract is formed when an offer is accepted
       An offer is made when one person proposes a set of terms to another with the intention that both will be bound if it is accepted
       An invitation to treat is not an offer: but an invitation to negotiate or an invitation to make an offer

Acceptance
       As soon as an acceptance of an offer is received a contract is created
       It is not possible to accept an offer by doing or saying nothing
       When the postal rule applies, an acceptance by letter or electronic mail is effective when sent

Unilateral Contracts
       An offer of a unilateral contract can be accepted only by performing the act requested; Carlill v Carbolic Smokeball Co [1893]
       A counter offer is not an acceptance and revokes the original offer
       A request for more information does not revoke the offer

Certainty
       A contract will be created only if a reasonable person could state with certainty what had been agreed; Scamell v Ouston [1941]
       A meaningless term in a contract can be ignored; Nicolene Ltd. v Simmonds [1953]

Termination
       An offer that has been revoked cannot be accepted
       Revocation is effective when received
       A person who refuses and offer cannot later accept it ( a counter offer is a refusal)
       An agreement made ‘subject to contract’ is not a contract

Legal Relations
       A contract will be created only where the parties intend to create legal relationships
       In business transactions it is presumed that the parties intended to create legal relations (unless evidence to the contrary)

Consideration
       A contract will only be created where the parties give some consideration to each other
       Consideration consists of a right given to one party or a loss or detriment suffered by another
       A contract is a bargain the consideration of one party given in exchange for the consideration of another
       A past act cannot be given as consideration (unless the other party requested that the act be performed and both parties all along contemplated that payment would be made for it)
       Consideration must be of some value

Formalities
       Most contracts do not need to be in writing
       Most contracts are not in writing
       Contracts in the form of deed do need to be in writing (Real Property Transfers)
       Some contracts are safer in writing (employment contracts)

Minors
       A person who is capable of making a valid contract has capacity
       Contracts made by minors may be vail, voidable or void
       Loans to minors cannot be enforced unless the minor agrees to pay the loan after they are 18

       Minors are not bound by contracts for unnecessary goods 

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