Contracts: principles and applications

¶ … Contracts

Elements needed in order for a contract to be formed

The essential aspects of contract that make it legally binding contract are; there must be an offer and acceptance in that the offer by one party is accepted by another party. Intention to create a legal relation, the contract will not be valid only on the basis of only there being an agreement, but also on the intention to getting into the legal agreement. There other element is consideration which refers to the price paid by the one party for the promise of the other party. Legal capacity is yet another element in forming a contract, those with mental impairment, minors, bankrupts, corporations and prisoners are not able to get considered as having legal capacity to get into a contract (Fitzroy Legal Services, 2012).

Conditions for an offer to be valid/legal sufficiency

There however are situations where a contract can be breached and a defense be poised for such a breach. The various defenses that can be poised for breach of contract include lack of having actually formed a contract due to lack of offer, acceptance, mutuality of obligation, consideration or even writing. These must be observed for an offer to be considered a valid offer. Lack of capacity to enter contract is another defense, incompetence, insanity or intoxication at the time of the contract formation are yet other defenses. It is therefore important to ensure that the parties getting into a contract, both the party giving an offer and the one accepting the offer are in the sound mind possible and sober. The other defenses afforded to defendants are unconscionability, fraud, mistake, undue influence as well as duress (U.S. Legal, 2010). There is need to ensure that there is no fraud involved at the signing of the contract for the offer to be valid.

The offer must also be accepted in person by the parties that have agreed willingly to get into the contract. The offer cannot be accepted on behalf of the person. For instance when A and B. gets into a contract, only B. can accept the offer and not C. However, during the process of contract creation there is the aspect of express agency. This is direct authority that an agent has. In cases where an agent relationship has to be determined, there are two parties involved; the principal and agent. The agent acts on behalf of the principal an agent therefore has a legal power to bind the principal. A principal should be very careful when it comes to the type of authority they give to an agent (The 'Lectric Law Library, 2013).

Considerations in a contract

Consideration is very important in formation of a contract. This can be a promise to do a given task or to stop undertaking a legally entitled to action as a result of a contract agreed on. In a bilateral contract, the involved parties will exchange mutual promises and each promise given and accepted is taken as a consideration that is sufficient for the other party. It is important to note that a consideration must have value that can be determined objectively by the involved parties in the signing of the contract. A promise to give love is not enforceable since such a promise is subjective.