Conflict in the marketplace

Contract

Contract

A contract is a legally binding agreement between two or more parties and if necessary, the parties may recourt to the courts to decide

Essential elements of a valid contract

Agreement=offer+acceptance

Offer

An offer is a proposal to give or to do something and when accepted there is said to be agreement e.g. a bid on a house at an auction

Acceptance

Acceptance is a positive unqualified assent to all terms of the offer e.g. the vendor is happy to sell the house

“Invitation to treat”

Goods on display are merely an invitation to the buyer to make an offer to buy but are not necessarily an offer to sell e.g. flick knives case.

Intention

The persons must want to create legal relations and for a legally binding agreement

Consideration

Each party in a contract must give something if value to the other party

Capacity to contract

The power of a natural person to enter into a contract, legally able, not legally able; 0-18, under the influence, unsound mind, diplomats, ultra vires

Real consent

A person must enter a contract of their own free will, no use of force, lies, misrepresentation

Legality of purpose

Contract should not be for a purpose which offends a common good or the law of the land e.g. illegal drugs, tax evasion, illegal weapons

Legality of form

Correct legal format and drown up in a particular manner, all insurance details are written in a contract called a policy

Condition

Fundamental part of a contract, if broken the contract is deemed to be null and void

Warranty

Less important part of a contract and if broken the contract may not be ended but the injured party may sue for damages

Ending the contract

Contract is ended when all the responsibilities and obligations that arose under the contract are no longer required

Performance

Most usual method and there must be complete and exact performance

Agreement

Both parties agree to end the contract early and are then free from any legal obligations to each other

Breach

A condition or fundamental part of the contract has been broken by one of the parties

Frustration

Due to some unforeseen circumstances it has been deemed impossible to complete the contract, often death or injury

The remedies of breach contract are

Damages, Specific performance, Rescind the contract

Damages

Monetary compensation is awarded to the injured party, a court decides on an adequate figure

Specific Performance

A judge orders that certain duties are carried out, it is a suitable means if damages are not appropriate

Rescind the contract

A judge attempts to place both parties back in the same position as they were before the contract began, the purpose if to release the parties from the contract