Contracts

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Contract: A contract is define as an agreement between two or more parties which is enforceable by law. Contract may be written or oral. There essential elements of contracts under English law are • Offer and Acceptance • Consideration • Intention to Create Legal relation • Capacity • Legality of Purpose Offer and Acceptance: The first step of contract is making an offer and the person or the party who makes the offer is Offeror and the person or the party to whom the offer is made is offeree. A contract takes place when offers are given by one person or a party to another person or a party. Offer must be clear to the offeree and there is no misconception in the offer. Consideration: Consideration must have some ʻ economic ʼ value, but the court will not investigate to see if the parties received equal value. Parties assumed to protect own interest, (Thomas v Thomas 1842). Consideration needs to be an economic value not necessary the same value. Each party to the promise must gain something and loose something by the virtue of promise. Intention to Create Legal Relation: There must have a meeting of minds also known as ʻ Ad idem when one party accepts the offer of another party. Both parties must understand and agree to make legally binding relations. It is a legal presumption that the parties must have an intention to create legal relations in commercial agreements not in social or domestic agreements. Capacity: Capacity refers to the soundness of mind. Persons who are mentally incapacitated at the time of contract can void the contract because they did not understand the terms of the contract and the other party can take advantage of their situation. If any contract made in the situation where a person is incapacitated then... ... middle of paper ... ... one party and the other party can save its money, this creates huge problems for both of the parties because many of the things go wrong. For example terms and conditions, responsibilities, duration of the contract, terms of payments are the essential components of a well drafted contract. Many problems arise when parties draft their contract and do not review contract from their side. A contract that is not clear and does not specifically defines the obligations of each party opens the door towards litigation that will cost more than the cost of paying a solicitor to properly draft or review the contract before parties signing contract. It is in the interest of both of the parties to have a solicitor who draft all the business contracts or review the contract for both of the parties or at least provide a template so both parties can use it to draft their contract.

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