the six elements of a valid contractIntent to create legal relations:
For a contract to be considered valid, when creating the contract there must be an intent to create legal relations for it to enforceable by law; legally bounding the parties to the agreement settled. Since not all agreement are enforceable by law it is important to distinguish an agreement which can actually be backed legally and those which cannot. If the agreement is one based upon a: SOCIAL or DOMESTIC agreement, the intention to create legal relations is missing and, therefore, the agreement is invalid and not enforceable by law. Example cases include: -Domestic agreement: Balfour v Balfour (1919) http://www.australiancontractlaw.com/cases/balfour.html -Social agreement: Simpkins v Pays (1951) http://www.e-lawresources.co.uk/Simpkins-v-Pays.php Offer: The offer of a contract is the proposal by one party to enter into a legally binding contract with another party. The offerer, the person attempting to make a legal contract, offers a legally binding agreement with, if accepted, the offeree. Offers are not to be confused with "Invitations to Treat" which is an invitations for offers, not an offer itself, thereby making it have no legal relations. There are, however, rules of a valid offer: -an offer must be communicated to the person accepting the offer -all the terms of the offer must be communicated to the offeree and brought to his/her notice -offer may specify conditions to be followed -an offer may be withdrawn/revoked at any time before acceptance -some contracts require people to be of a certain age -the offer must be legal Example Cases include: -Invitation to Treat becoming an Offer: Carhill v Carbolic Smoke Ball Co. (1893) http://www.e-lawresources.co.uk/Carlill-v-Carbolic-Smoke-Ball-Co.php -Invitation to Treat: Partridge v Crittenden (1968) http://www.e-lawresources.co.uk/Partridge-v-Crittenden.php Acceptance: The acceptance of a valid contract is when the offeree, the person being offered, agrees to the offeror's, the person who is offering, proposal. Acceptance must be actually communicated, and if not correctly done, cannot be enforceable by the court. Once this valid offer takes place, the contract is then legally binding. Example cases include: -At what point the acceptance was made: Entorres v Miles Far East (1955) http://www.e-lawresources.co.uk/Entorres-v-Miles-Far-East.php Consideration: Since a contract is ultimately based on an exchanged between two parties, consideration is one of the critical things that distinguishes an social or domestic agreement from a legally binding agreement. This gain or benefit exchange must be present in all simple contracts if they are to be valid. The exchange provided by the person who wishes to enforce the contract must be both be legal and possible to carry out. Another factor that distinguishes a legal contract from unenforceable one is if the contract was if the agreement was of past consideration. This is known as "past performance" and in the eyes if the court, is considered invalid. To summarise these ruled of consideration include: Consideration must exist in every simple contract Consideration must not be illegal or unlawful -it must be definite -it must be possible to carry out -it must be provided by the person who wishes to enforce the contract Consideration offered now in return for past performances is not good consideration Example cases include: -Consideration must not be of past performance: Re McArdle (1951) http://www.e-lawresources.co.uk/Re-McArdle.php Capacity: For a contract to be legally binding it must be agreed between two parties who have the capacity to known what they are agreeing to. If the party agreeing to the proposal is not of legal capacity the contract is void and not legally bound. Factors to consider are: -Mental disorder -Intoxication -Bankrupts -The Crown -Infancy - However if a party to a contract is a minor then the contract is not binding unless it is ratified by him/her when he/she turns 18. There are four main exemptions to this general rule: i) An infant who contracts for 'necessaries' is bound by that contract including things that are used to maintain the infant in question at the standard of living he/she enjoys. ii) Where the minor enters a contract for an apprenticeship or some other agreement is to his/her future benefit. iii) A third exception is those contracts which involve a continuing obligation, and contracts where a minor acquires property of a permanent nature. A minor can buys shares in a company or join a partnership. iv) On reaching 18, a minor may elect to confirm an agreement made previously, so that he/she becomes legally bound by the terms of the contract. This is known as RATIFICATION. Example cases include: -Capacity in regards to alcohol: Blomley v Ryan (1956) http://www.australiancontractlaw.com/cases/blomley.html -Infancy: Nash v Inman (1908) http://www.australiancontractlaw.com/cases/nash.html Legality: Lawfulness of object: the object of a contract can be described as the purpose for which it came into being. Under both common and statute law, if the object of a contract is considered illegal the contract is void and unenforceable. When this occurs, the parties then have no legal right or remedies to continue on with the contract or make one with an object considered illegal. Contracts of this type fall into 3 categories. i)Contracts illegal at common law. This includes: a) contracts where the objects is the commission of a crime or tort, for example an agreement to rob a bank. b) contracts depending for their performance on sexually immoral acts c) contract contrary to public policy ii) Contracts made illegal by statute law Parliament passes more and more statutes each day and some of these may affect private contracts. iii) Contract Void by Statute. For example, a person cannot enforce a wagering contract and hence cannot sue to obtain winnings from illegal gambling Example cases include: - Legality of Contract: Upfill v Wright (1911) http://www.studentlawnotes.com/upfill-v-wright-1911-1-kb-506 |
|