Requirements for a valid contract
BTEC National Business
Unit 21: Aspect of contract and business law
Assignment 1: The requirements for a valid contract
P1: Identify the legal criteria for offer and acceptance in a valid contract.
In order for a contract to be legally binding, both parties must make an offer and an acceptance of that offer. An offer, by law it is generally presumed that in a commercial transaction, the contracting parties must have the intention to create a legally binding contract. This means that if they have signed a contract for business-related activities, then they will be able to sue the other party if that party does not fulfill the contractual provisions.
An offer is a proposal in specific terms made by a person or an organisation, this person is called the offeror and the person who the offer is intended is called the offeree. An acceptance is the offeree’s clear and unconditional agreement to the offeror’s terms. Should the offeree try to change any of the terms put by the offoror there is no contract as they have tried to change some of the terms of the offer.
This presumption can only be rejected if the parties expressly state that they do not intend to make a legally binding contract. On some documents they may have "subject to contract" printed on them. These words have the legal meaning that the document is not a contract, and that all of the contents will be bound by a subsequent contract at a later date. A party that is acting “subject to contract” can withdraw from the negotiation at any time before the contract is concluded. In case of dispute, the burden of proof that the intention was to create a binding contract rests on the person who wishes to rely on the contract.
An example of this type of case is Carlill v Carbolic Smoke Ball Co. 1893. The Carbolic Smoke Ball Company placed an advert in their paper stating that if a customer used their product, as directed 3 times a day for two weeks they would not contract the flu. So sure in their product
Unit 21: Aspect of contract and business law
Assignment 1: The requirements for a valid contract
P1: Identify the legal criteria for offer and acceptance in a valid contract.
In order for a contract to be legally binding, both parties must make an offer and an acceptance of that offer. An offer, by law it is generally presumed that in a commercial transaction, the contracting parties must have the intention to create a legally binding contract. This means that if they have signed a contract for business-related activities, then they will be able to sue the other party if that party does not fulfill the contractual provisions.
An offer is a proposal in specific terms made by a person or an organisation, this person is called the offeror and the person who the offer is intended is called the offeree. An acceptance is the offeree’s clear and unconditional agreement to the offeror’s terms. Should the offeree try to change any of the terms put by the offoror there is no contract as they have tried to change some of the terms of the offer.
This presumption can only be rejected if the parties expressly state that they do not intend to make a legally binding contract. On some documents they may have "subject to contract" printed on them. These words have the legal meaning that the document is not a contract, and that all of the contents will be bound by a subsequent contract at a later date. A party that is acting “subject to contract” can withdraw from the negotiation at any time before the contract is concluded. In case of dispute, the burden of proof that the intention was to create a binding contract rests on the person who wishes to rely on the contract.
An example of this type of case is Carlill v Carbolic Smoke Ball Co. 1893. The Carbolic Smoke Ball Company placed an advert in their paper stating that if a customer used their product, as directed 3 times a day for two weeks they would not contract the flu. So sure in their product