Being a law student.you must understand the Essentials of A Valid Contract.A contact must have these elements in order to be called valid.Following are 5 essentials of valid contract.
1. INTENTION OF THE PARTIES
Every contract must have mutual assent or consent. Mutual assent is deter. mined by the acts and the reasonable meaning of the words of the parties and not from the unexpressed intentions of the parties. This is referred to as the objective test for ascertaining intent. In other words, it is not necessary to have an actual meeting of the minds of the parties to have a valid contract. It is sufficient if there is an apparent meeting of the minds. The following case illustrates the point that an expression can be reasonably understood as manifesting an intent to make an offer and not to be a joke.
2.Negligence In Signing Or Accepting A Contract.
As a general rule, one who signs or accepts a contract which on its face, is a contract is deemed to assent to all of its terms. The party cannot escape liability on the grounds that he or she has not read the contract. Of course, if-fraud was present in procuring the signature, or if a fiduciary relationship existed between the parties giving rise to an affirmative duty of disclosure, the signer would not be liable but would probably end up in expensive litigation. A common complaint in a contract dispute is either “l didn’t read the contract” or “l didn’t understand the contract.” Generally this is no excuse, Therefore, it is very important to remember that you should never sign a legal document of any kind unless you understand it. If you do not understand the document, take it to an attorney, who can advise you as to its legal consequences.
Essentials of A Valid Contract In Business Law
3. THE OFFER
IN GENERAL A contract results from an offer and the acceptance thereof. No particular formality is required. An offer is a proposal to enter into a contract, and it may be expressed by acts as well as by words. The person Who makes the offer or proposal is the offer or; the person to whom it is made is the offeree. To be legally sufficient, an offer must meet the following criteria:
1. The words must show a present contractual intent.
2. The terms of the offer must be sufficiently clear and complete so that a court can determine the parties’ intentions. 3. The offer must be communicated to the offeree, and the offeree must have knowledge of the offer.
For example, John offers a reward for the return of his lost ring- If Bob returns the ring without knowledge ofthe offer, he cannot claim the reward. Or if John writes a letter offering to sell his ring to Bob but does not mail the letter, Bob has no power to accept the offer even if he learns of it, since the offer was never communicated to him. If John inadvertently mails the offer to Bob, there a valid offer would exist, because communication is determined objectively, and not by what the offer-or subjectively intended.
4.CERTAINTY OF OFFER
IN GENERAL An offer must be sufficiently definite so that the performance required by the offeree is reasonably certain. The offer must describe the subject matter and the quantity and should state the price. However, the complete absence of any mention of the price is not necessarily fatal, as the court may interpret the contract to mean the market price or a reasonable price. The offer should state the time and place. However, failure to so state does not necessarily render the contract void if the intent of the parties is otherwise ascertainable. In determining whether a contract is sufficiently enforceable, the court will liberally interpret agreements or nontechnical language. The court will attempt to make the contract valid if uncertainty exists by carrying into effect the reasonable intentions of the parties if they can be ascertained.
IN GENERAL An offer must be accepted before a contract exists. Acceptance is an ex- pressed or communicated overt act by the offeree indicating that he or she assents to the terms of the offer. It may, if the ofTer permits. take the form of performing the act called for in the otlör (unilateral contract), a promise communicated to the offeror (bilateral contract), or the formal act of both parties signing a written document. Mere words, such as “O.K.,” can constitute an acceptance.
Where the offeror signs and delivers a contract to the offeree and the latter accepts it. the offeree will be bound even though he or she does not sign it (e. g., landlord hands lease to tenant, who accepts it without objection). The right to accept an Offer cannot be assigned and therefore can be accepted only by the person to whom it was made. The student should remember that once an offer is accepted, a contract exists unless there is a valid defense. In the case ofa fluctuating market, the offeree is in the better bargaining position, because he or she can reject or accept the offer. It is usually better procedure, therefore, to send out a quotation of prices (making it clear that it is not an offer) rather than an offer.