Understanding Contract Law: Elements Of A Valid And Binding Contract Essay.

What is Contract Law?

A lawfully enforceable contract which was created amongst two or more persons would be defined as a contract. A lawfully binding agreement was defined as an intended contract which was made among two or more individuals which was enforceable under law. As contract law has been observed as the body of law which was applicable with regard to the privileges and the duties of the individuals who were parties to the contract (In Brief, 2017). Such law governs the association, validity and interpretation of a contract which was made among two or more individuals or corporations. Agreements were obviously regarded as a major part of every trade and it was as a result regarded as a fundamental that all the individuals to an agreement understand the conditions which were incorporated in an agreement (Harold Stock & Co, 2013).

The creation of an agreement initiates with a proposal as it permits the individual to whom it was made to accept such an offer, by granting the basis of the official contract or such an individual could refuse the proposal and make a counter offer. But such a proposal must be conversed to the other individual. An individual would not be treated under law as having accepted the proposal of he or she have not actually or beneficially had knowledge of the same (In Brief, 2017).

Similarly, in order to make a contract valid there has been certain different constituents which have to be bear in mind such as:

An offer: It may be described as a statement of showing eagerness to an agreement on some particular conditions which were made with the intent that if they were accepted than there would be binding agreement (The Law Handbook 2016, 2017). It may be expressed or implied. As when an individual makes a proposal to an individual and that person accepts the offer then it creates a binding agreement. Although it has been observed that the term offer was often misinterpreted with the term of invitation to treat but they needs to be differentiated. As a proposal would observed to be directed to a binding agreement on approval on one hand, an invite to treat could not be established as it was simply a demand for offer on the other hand (E- Lawresources, 2017).

In case of Carlill v Carbolic Smoke Ball co [1893] 1 QB 256 it was stated that in order to conclude in a proposal it must be shown that the person making an offer had the intention to be bound by the agreement. Although, this case has also been used as an exception but it states that an ad could amount to a proposal but in some situations only.

Key Elements of a Valid and Binding Contract

It was in Partridge v Critenden (1968) 2 All ER 425 wherein it was stated that the ads were usually considered as invitation to treat and not an offer.

Acceptance: It has been defined as a promise on the action of the person who makes an offer by indicating his eagerness to be bound by the conditions which were incorporated in an offer. But once valid acceptance occurs then a binding contract was formed. But there were 3 main rules in relation to acceptance which must be bear in mind such as:

It must be communicated to the person who made such offer;

Condition of the receipt must precisely contest the conditions of the proposal;

Contract has to be positive (E- Lawresources, 2017).

In Entorres v Miles Far East [1955] 2 QB 327 it was affirmed that the person who made an offer must receive the approval before it turn out to be efficient.

In Hyde v Wrench (1840) 49 ER 132 it was stated that if the conditions differ with what the offer had then there would be no contract.

A intend to create lawful relationships: An agreement would be regarded as a lawfully binding contract. As once a proposal has been accepted then it would amount to an agreement but not essentially in a contract (All Business, 2017). Because the constituents that changes any agreement into an accurate contract was the element of having an intention to create lawful relationships. The tribunals on this point looks for some proof that the individuals to the contract intended that it should be ruled by, and subject to, the law of contract; so that the contract provides rise to lawful consequences. Each party thus adopts lawful duties, and each may search for a cure in the event of violation (E- Lawresources, 2017).

In Edwards v Skyways Ltd [1964] 1 WLR 349   it was held that where a contract has been made in a commercial context then the law hoists a assumption that the individuals do propose to make lawful associations by the contract.

Consideration i.e. price paid for the promise: It has been considered as a price paid for a promise. As in Thomas v Thomas (1842) 2 QB 851 it was stated that price could be regarded as negotiation of the contract as it must be something of value.

So, if these elements would be present in an agreement then it would be regarded as valid and binding upon the parties to the contract (E- Lawresources, 2017).

Offer

It was in a English law precedent case of Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 wherein it was held that an ad which contained some conditions in order to attain a reward which was contained in a obligatory independent proposal which could be established by an individual who executed its conditions. It concerned a remedy of flu which was defined as the carbolic smoke ball. The producer displayed that the purchasers who instituted it did not effort would be granted £100, which was a recognizable sum of cash at that point of time. But it was held by the appellate court that the necessary constituents of an agreement such as offer, acceptance, consideration and intention were all present in this case (Macken, 2017).

 It was also stated that there was a complete binding agreement for £100 with the applicant as the reason provided was that the purchasing or simply utilizing the smoke ball formed good price as it was a separate harm which was imposed at the request of the corporation and also more individuals would purchase smoke balls by depending on the ad which was obvious profit to the defendant. So, it was stated that the use of the product by Carlill was also regarded as a sufficient consideration under law. As an individual who initiates a proposal may decline in order to need notice of receipt if he or she desires (E-Lawresources, 2017).

An individual who creates a proposal bestows with the necessities of become aware of reception if the form of the proposal depicts that the notice of the recognition would not be necessary. But in order to accept a proposal, an individual needs only to pursue the designated method of acceptance. So, if the offeror either in an expressed or an implied manner associates in his proposal that it would be sufficient to act without any notice of acceptance, then presentation would be adequate acceptance without any announcement (E-Lawresources, 2017).

As in this case there was price as the problem experienced by the applicant in utilizing the smoke ball was aimed at as adequate price because the defendant received a gain in having people consume the smoke ball. Though this was regarded previously as a 'nudum pactum' and there was no benefit to the respondents in the utilization of the ball. But the appellate body rejected the saying and stated that

'It was rather clear that in the view of the advertisers a  mere utilization by the community of their cure, if they could only attain the community to have self-assurance as much as necessary to utilize it, would respond and create a sale which would be unswervingly helpful to them. So, the advertisers would attain out of the utilization of a benefit which would be enough to make up a consideration.' As an individual who carried out an act upon this ad and acknowledged the proposal, put himself to problem at the demand of the respondents. This only would be regarded as satisfactory to constitute something of value (Australian Contract Law, 2013).

Acceptance

Consideration may be executor or executed. It maybe executory where a promise was provided for a promise or it may be executed where an act or patience was granted for a promise. So, this case would be regarded as an excellent instance of executed price where the respondents publicized the promise of a prize for the individual in order to make use of their smoke balls in a particular way (Australian Contract Law, 2013).

Neighbour principle has been stated as the basis which provides that an individual must take reasonable care in order to see that it does not harm other individuals who was their neighbour who could foreseeably be affected by their conducts. A neighbor was identified as an individual who was so intimately and unswervingly pretentious by the act that an individual have to attain then in thought as being so exaggerated when undeviating the mind of an individual to the acts (Dowling, 2010).

Under the law of negligence, it was in the precedent case of Donoghue v Stevenson (1932) AC 562, 580 wherein the concept of neighbor principle was established for the first time as per the modern law of tort (Law Gov Pol, 2014). It granted a sufficient foundation in order to resolve duty of care. But in this case, it was essential to overcome the issues generated by privity of contract in order to grant a choice route of assertion for an injured individual. It was the friend of the plaintiff that brought the ginger beer that ultimately caused her harm and therefore only her friend that had a privilege to sue under the agreement. But the problem was resolved by the court by imposing liability in negligence on the proprietor of the café, stating that such would be probable where a duty of care could be found to lie among the owner and the victim.

The neighbour principle consequently opens the door to assertions in negligence for injured individuals by identifying the class of individuals to whom an obligation may be owed in any specific case. It was clear that the principle does not heave open the floodgates to unrestrained assertions, as a tortfeasor would not be held to owe a obligation of care to those who were not close sufficient to be in his or her deliberation at the instant of the tortuous act.

Therefore, in conclusion it could be argued that the neighbour principle granted a good concept under the law, but as the above mentioned case law has demonstrated it was not sufficient for restricted application. This principle remains the basis of the law on the obligation of care, but it has been added to and refined by the tribunals over the years and therefore should not be dependent upon in a narrow-minded style (E-Lawresources, 2017).

Consideration

Employment law has been immensely impacted by EC law as it was concerned with the association among employer and employee. It includes a common law basis of the agreement of employment and a range of statutory sections. As a result it was essential to determine the status of employment with an individual, in terms of whether they were employed or self employed as some employment privileges derive from the consequence of the individual for being a worker (Daniels, 2008).

Under the common law principle of vicarious liability a common law tests was devised in which it was stated that when the managers may be held legally responsible for the twisted acts of their workers purchase may not be held legally responsible for the acts of the self employed. There have been 3 tests which have been used to determine the status of the employment such as (Social Security Administration, 2017):

Control Test: In Yewens v Noake it was stated that, “A Servant has been regarded as an individual who works on the order of his master in a way in which he shall do his work." In the past, if an employer was able to tell a worker not only what to do, but specify how to do it and when, then this would specify an agreement of employment was there, whereas a small extent of control states it to be self-employment. So, the control test became unfashionable as the single criterion but was seen to be significance. It was, however, in regards to problems of employment status this test was often measured as critical.

Integration Test: In the matters, where hospitals were held vicariously accountable for the acts of surgeons, radiographers and other experts then it would be defined as integration test. It was established in Cassidy v Ministry of Health, where it was stated that a doctor working within the NHS was a worker of the Health Authority. Whereas in another matter it was recognized that the decisive query was whether the individual was employed as part of the trade, whether his or her work was conducted as ‘an integral part of the trade or whether it was simply an element to it. Although, it has the benefit of being a moderately uncomplicated one, the great fall back of this test lies in its failure to demonstrate exactly what was meant by ‘integration’ and ‘organization’.

Multiple Test: Gradually the tribunals have considered that no one test or set of criteria could be irrefutable when determining employment status, and so the test adopted by tribunals for deciding whether an agreement was of or for service was the ‘multiple test’. This was a threefold test: an agreement of service which needs obligation to provide private service, the survival of an adequate degree of control and the terms of the agreement being consistent with service.

References

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Australian Contract Law. (2013) Carlill v Carbolic Smoke Ball Co Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1. [Online] Australian Contract Law. Available from: https://www.australiancontractlaw.com/cases/carlill.html [Accessed on 9/3/17]

Daniels, C. (2008) Contract of employment. [Online] Chartered Institute of Personnel and Development. Available from: https://www2.cipd.co.uk/NR/rdonlyres/108A3BBD-2FE8-49C0-91BB-F4DA2CED961F/0/... [Accessed on 9/3/17]

Dowling, K. (2010) Australia: The "Neighbour" Principle Still the Yardstick for Duty of Care for Public Authorities. [Online] Mondaq. Available from: https://www.mondaq.com/australia/x/97390/Government+Contracts+Procurement+PPP/The+Neighbour+Principle+Still+the+Yardstick+for+Duty+of+Care+for+Public+Authorities [Accessed on 9/3/17]

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