Legal Contracts: Essential Elements, Validity And Remedies

Issue

A legal contract, constructed between two or more parties, binds them into a valid agreement that can be enforced by the court. A valid contract requires fulfillment of various essential elements which include, offer, acceptance, consideration, capacity, and intention (Singapore Academy of Law, 2015). A legal contract can be written or oral; a written contract is more beneficial since it is easier to enforce it through the court. The written contract which is signed by the parties, act as an evidence which can be enforced by the court.

The terms and conditions of a contract legally bind the parties to a contract to perform or not perform any legal act. On noncompliance or non-fulfillment of the terms of contract, the party can file a legal suit against defaulting party. The court can either provide a judgement for enforcing the terms or provide monetary or non-monetary remedies against the defaulting party. There are several other alternative Dispute Resolution Methods which parties can select instead of filling a lawsuit, such as meditation, negotiation, arbitration, and other (Singapore Academy of Law, 2015).

The issue in the given case is that whether a valid contract has established between Alan and other three parties including, Bernard, Charleen, and Damian. Further, if a contract has created then who are the contracting parties.

A contract creates several obligations and rights for the parties that are recognised and legally enforced by the court. A valid contract requires fulfillment of various essential elements, following is the essential elements of a contract:

• Offer: According to Guenter Treitel, an offer can be defined as the willingness to enter into a contract which includes specific conditions that are made with an intention for enforcement after the acceptance of another party; it can be written, oral or through conduct (Treitel, 2002). The person to whom an offer to contract has made is known as ‘Offeree’ and person making the offer called ‘Offeror’.
• Acceptance: According to Patrick S. Atiyah, acceptance occurs once a party give his/her consent to the conditions or terms of a legal contract and provide a valuable thing as a consideration to confirm the approval (Cane & Atiyah, 2013).
• Consideration: The value that is offered and accepted by the parties to perform or not performance the terms of a contract is called consideration.
• Intention: A valid contract requires that parties must have the intention to bind themselves by the terms of contract. The consent of parties must be free from external threat or force.
• Capacity: It is necessary that parties of the contract are capable of entering into a legal contract, for example, a minor, insolvent or mentally challenged person cannot construct a valid contract.

Alan posted on his Facebook page an advertisement to sell his book along with handwritten notes; his Facebook friend Bernard saw the post and decided to buy the book. Instead of accepting the terms of Alan’s offer, a counteroffer for $150 was provided by Bernard. Alan rejected the counteroffer and provides that he will sell his book at $200, and he already has an offer at the similar price. After that, Bernard decided that he will buy the book in $200 and he accepted the original offer of Alan. He sent his money through post which is received by Alan on the morning of 5^th November. According to the principle of law, a counteroffer terminates an original offer. The Hyde and Wrench (1840) 49 ER 132 case is a good example; in this case, the court held that after providing a counteroffer, a party cannot accept the original offer; a counteroffer automatically terminates the original proposal (Graw, 2012). Bernard lost his right to accept the offer once he provided his counteroffer, the original proposal ceases to exist; his decision to send money to Alan through post cannot be considered as a valid acceptance. Therefore, Bernard and Alan did not have a valid contractual relationship.

Rule

Charleen told her brother that she is interested in buying the book along with handwritten notes after seeing the Facebook post. She was taking her GCE “O” level that year, and she is still a minor. In Nash v Inman (1908) 2 KB 1 case, it was held that a minor cannot enter into a legal contract, and he/she cannot be held liable for complying with an agreement’s terms (Goodfellow, 2005). Therefore, Charleen and Alan did not enter into a valid legal contract.

In case of Damian, he was interested in buying the book, and he immediately accepted the offer of Alan by sending him an SMS. Damian stated that he is willing to pay the money on 4^th November, and Alan accepted to the condition. Thus, Damian and Alan have entered into a valid legal contract.

Conclusion

In conclusion, Damian and Alan entered into a legal contract because both of them fulfill the essential requirements of a valid contract. In case of Bernard, he provided a counteroffer which terminated the original offer therefore no contractual relationship exist. Charleen is not capable of entering into a legal agreement because she is still a minor.

The issue is Bernard’s legal position and remedies against Alan.

A counteroffer terminates an original offer, and the offeree lost his/her right to accept the original offer.

Bernard decided to buy the book and handwritten notes after seeing the Facebook post of Alan, but he provided a counteroffer for $150. Alan rejected such offer and stated that he already has an offer for $200. Then, Bernard decided to purchase the book for $200, and he sends money through the post. Alan received the money on 5^th November and on 7^th November he gives his book to Bernard by saying that handwritten notes are written inside the book. In Hyde v Wrench (1840) 49 ER 132 case, Wrench was selling his land for $1200, and Hyde rejected the offer, then Wrench offers his land for $1000, and Hyde gives a counteroffer for $950 (Bender & Do, 2014).

Wrench rejected Hyde’s counteroffer, and then Hyde decided to purchase the land for $1000. Wrench rejected to sell his land and Hyde file a lawsuit against him for breach of contract. The court held that a counteroffer automatically terminates the original offer and the offeree lost his/her right to accept the original offer. The Dickinson v Dodds (1876) 2 Ch D 463 case provided similar judgement, in which the court held that nonacceptance of original offer, terminates its existence (Gooley, Radan & Vickovich, 2007). In case of Bernard, similar principles apply, and he did not have any legal rights against Alan. He cannot file a suit against him for not providing him handwritten notes along with the book.

Application

Conclusion

In conclusion, no legal contract constructed between Bernard and Alan, therefore, Bernard did not have any legal right or remedy against Alan. 

The issue is Charleen’s legal position and remedies against Alan.

A minor, insolvent or mentally challenged person is not capable of entering into a legal agreement.

Charleen is still a minor therefore she cannot enter into a valid legal contract (Nash v Inman, 1908). The court held in De Francesco v Barnum (1890) 45 Ch D 430 that a minor can only enter into a legal contract which is created for his/her future benefits (Taylor, 2004). There is no evidence that purchasing the book can be beneficial for Charleen in the future, hence, it is a void agreement. As per Felthouse v Bindley (1862) 142 ER 1037 case, non-rejection of an offer cannot be constituted as a valid acceptance, similarly, silence cannot be considered as an approval (Austen-Baker, 2006). Alan on smiled at Charleen which is not a valid method of acceptance. Therefore, Charleen did not have any remedies or legal rights against Alan.

Conclusion

In conclusion, Charleen is a minor, and she cannot enter into a legal contract. 

The issue is Damian’s legal position and remedies against Alan.

Failure in compliance with terms of a legal contract construct a breach of contract, and a lawsuit can be filed against defaulting party for enforcement or remedies.

Damian accepted the offer of Alan, and he gave his acceptance through SMS; he also provided that he wants to give him money on 4^th November and Alan gave his approval. Damian gives the money to Alan on Kaplan Higher Education’s campus, and Alan accepted the money. Alan then purchases a new copy of the book and gives it to Damian along with his handwritten notes. Like Redgrave v Hurd (1881) 20 Ch D 1 case, Alan gave a false statement and misled Damian into a legal contract, and he did not fulfill his obligation by giving his original book along with handwritten notes (Waddams, 2013). Therefore, Alan has breached the terms of contract and Damian can file a lawsuit against him for collecting the original book or collect his money back.

Conclusion

In conclusion, non-fulfillment of contract terms and misleading a party is considered as a breach of contract and Damian has a right to file a lawsuit against Alan to receive his money back or get the original book. 

Conclusion

Dispute resolution includes various methods that parties of a contract can use to solve the contractual dispute between them. The method of dispute resolution includes negotiation, arbitration, mediation, collaborative law, and others (Goldberg, Sander, Rogers & Cole, 2014). The parties of a contract can file a lawsuit on breach of contract, or they can solve the dispute through Alternative Dispute Resolution methods. The court encourages the use of alternate solution in case of a contractual breach because it saves precious time of both parties and the court. The parties can avoid the long and complicated process of litigation by selecting suitable ADR method.

In meditation, the parties appoint a neutral third party called ‘mediator’ who guides and facilities the parties to accept a mutual agreement. Instead of focusing on defaulting party or condition of breach, mediator focus on finding middle ground for the parties of a contract (Taylor, 2012). Another method of ADR is arbitration in which parties mutually agreed to bring their dispute to an arbitrator who is a neutral third party. The arbitrator listens to both sides and provides his judgement based on the principle of natural justice. The arbitrator’s decision is legally binding upon the parties of a contract (State Court, 2017).

In Singapore, the arbitration facility is provided in Singapore International Arbitration Centre. The Family justice courts and State court provide the services of mediation. The Singapore Meditation Centre and Singapore International Centre provide the facility of private mediation (McMullan, 2016). The Family Resolution Chambers and Child Focused Resolution Centre are performing the activities of family-related disputes and solve them through alternative dispute resolution.

The advantage of arbitration and mediation method is that they both save a lot of time and money of the parties. Usually, courts take a lot of time to give decision for particular cases, and a lawyer and court fees also increase the expenses of the parties. The mediator and arbitrator also listen to both parties side and establish a close connection with them which assist in fair judgement (Goltsman, Horner, Pavlov & Squintani, 2009). These methods also provide the benefit of confidentiality to the parties because count’s transcripts are public record and anyone can access them.

The main disadvantage is that large and wealthy corporation take unfair advantage of alternative dispute resolution methods to settle their disputes in private to avoid public humiliation; they also use the money to influence the fairness of judgement. It is difficult for parties to file an appeal against the order of arbitrator because he/she act as both judge and jury. Many parties did not prefer to leave their faith in the hand of a third party (Koremenos, 2007). The cost of arbitrations and mediation is lower than court but in many cases the situation is opposite, and parties have to pay high amount for alternate solutions than compared to court proceedings.

Conclusion

In conclusion, there are several advantages of selecting ADR method along with various disadvantages as well. But, it is modern method of dispute resolution that saves time and money of the parties. Therefore, after analysing their situation, the parties should adopt an appropriate ADR method. In case of Alan and Damian, they should adopt either mediation or arbitration to resolve their dispute because it is faster and cheaper option. 

References

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