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Contracts can be termed as an agreement that officially binds two parties. It can either be oral or written. It essentially can be termed as a promise reached by either two or more people which the court has the ability to judge. It is certain to note that for a contract to be termed as valid it ought to have six vital elements. This include acceptance, legal capacity, consent, offer, consideration, acceptance and the intent to create a legal relationship.
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Elements of a valid contract
There can be no contract without an offer. It is the first element of any contract that makes it either acceptable or valid. In any contract it is very vital that one party makes an offer. Simply an offer can be termed as a promise to action or refraining from that action, which is made by one party in anticipation for a return promise by another party or parties to fulfill the same (Veljanovski 2007). It is certain to note that there exists a big difference between an offer and the willingness to negotiate or deal. It is not mandatory that an offer be made to a specific person as it can be made by an individual to the whole world or to a class of people. It is also a definite promise to be bound so long conditions and terms stipulated are acceptable. If the offeree wants to withdraw he ought to communicate it in advance before it is accepted.
For a contract to be enforceable there ought to be an acceptance by the other person or party. There is certainly no contract if the parties are discussing or negotiating on the terms and conditions. The acceptance therefore ought to be made in writing or also verbally. The acceptance additionally ought to be unequivocal. The law doesn’t deem that a person has accepted the contract just because they have not expressly made any indication of rejecting it.
Consideration is very vital as it means that the other party ought to be giving something in return. It is essentially the price that is paid to fulfill the promise made to the other party. It is important to note that the price ought to be valuable. However, this doesn’t imply that it must in monetary terms (Stone 2005). A consideration can be right, interest or benefit that is transferred to another party. Additionally it can be responsibility or loss, detriment or forbearance undertaken or suffered by another party.
Intention to create legal relations
An agreement doesn’t just become a contract as the parties to the contract must be having the intention to be legally bound to the contract. It is certain to note that this in most cases is not explicitly stated in the contract but it is inferred based on the circumstances from which the contract was made by the two parties (Ayres and Ayres, 2012). The law perceives commercial based arrangements as having an intent to be legally binding. However social or domestic contracts are perceived not to have a legal intent unless it is proven that the parties to the contract had the intention to make it legally binding.
Legally binding contracts are not freely available to all. Some of the groups that are legally restricted include the minors, prisoners, bankrupt persons, and persons with mental impairment. Having the capacity to provide consent generally is implied that the parties to the contract have the ability to understand the nature of the contract. An individual with mental impairment may be in a position to understand some contracts but may not comprehend complicated contracts.
Contracts generally tend to mean that the parties must have been in agreement due to their free will and that they properly know the elements of the contract. Simply the consent from parties to the contract must be genuine (Adams, and Brownsword, 2007). Individual consent may be adversely influenced by factors such as duress, false statements, mistakes and finally undue influence.
In the Carlill v carbolic smoke ball company case, the company had come up with a new drug and in their advertisement they had highlighted that the drug would be a perfect cure for influenza and that those that didn’t get cured were asked to claim £100. The plaintiff Carlill got wind of the advertisement and decided to purchase the drug. He went ahead and used the drug as per the set requirements but he still contracted influenza. However when Carlill went to the company to claim the reward as had been outlined in the advertisement, the company refused to pay. Conversely, Carlill went ahead and took the company to court citing that she had been duped and therefore wanted damages for the failure on the company’ s part to deliver its promise (Schwartz and Scott, 2003). The defendant was of the opinion that the advertisement was just but a marketing gimmick and therefore it ought not to have been taken seriously. The court held that the company was liable to pay a reward as there existed a unilateral contract which was composed of an offer that was made in terms of advertisement. Additionally there was an acceptance which was in the form of the plaintiff executing the conditions presented by the offer.
It is important to highlight that consideration can be categorized into two; executory and executed consideration. However both forms of consideration are sufficient. An executed consideration occurs by the performance of an act rather than a promise being made for the performance of an act. On the other hand an executory consideration occurs by the promise being made by one party on the performance of an act. It is certain that most contracts are usually executory however the Carlill v Carbolic smoke ball company was an executed contract. This because the acceptance of the contract occurred at the time of acceptance.
In the above case consideration was evident as the inconvenience and pains suffered by Carlill by utilizing the drug as outlined provided sufficient consideration. Further it is important to note that the company also received a benefit by making people use their products. Therefore all the essential elements of a contract were present in this case therefore the company was liable to compensate the plaintiff (Treitel 2003).
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The neighbor principle was a result of the case of Donoghue V Stevenson. This was the birth of the law of negligence. It however interesting that a bottle of beer and snail was the source of such a vital law that is applicable to date. In this case the plaintiff, Donoghue, was in a café with a friend where they were both drinking ginger beer that they had ordered. The beer came in a dark opaque bottle and therefore the plaintiff was not in a position to see its contents. Donoghue drank some of it before her friend poured the contents into a tumbler only to see a rotting snail floating on top (Taylor & Emir 2015). Based on this the plaintiff suffered from not only severe gastro-enteritis but also shock just from the sickening sight. He therefore sued the defendant claiming that the ginger beer was their product and they had manufactured for sale to the public.
Additionally he provided more evidence claiming that the beer bottle also had their name on the label and that it had been sealed by the defendant. His lawyer went ahead to claim that it was the defendant’s task to spare some time and make sure that no snails could make their way to the beer bottles. Additionally he was to be required that he inspects all the beers before selling them to public. Therefore since he had failed to do both then he was directly responsible for the accident. The case was then taken to the House of Lords and it is the ruling of one of the Lords, Lord Atkins, that stood out. He in specific noted that it was the duty of the defendant to ensure that there were no omissions or acts that would pose a danger to the neighbor. The defendant was then found guilty for negligence. Therefore according to this case the term neighbor got to mean an individual who would be affected due to negligence by another person. It is from this case the neighbor principle came into being and its influence is still prevalent in modern law.
There exists three tests that have for long been used in the determination of the status of employment. They include the multiple test, integration test and finally the control test. The control test was first in use in the 19th century and the courts used it to analyze whether the master had control or bore the right to control the workers and also the way they went ahead doing the work (Perritt 2004). In the past if an employer had the ability to control what the worker does and how he does it then that would have signified that there existed an employment contract. On the contrary if there was small degree of control then that would have amounted to self-employment. However with the transformation of the world and technological change, it is certainly very hard for an employer to have control over the highly skilled employees (Deakin and Morris 2012).
The second test is the integration test and came into being in cases in the 1940s and 50s as a replacement of the control test. It was meant to provide an explanation of why skilled and professional workers exhibited a large degree of independence in the way they undertook their duties. It became an extension of the control test and it became applied on workers who were not guided by the employer on what to do due to their skills and experience. Based on the control tests such employees could be termed as employees therefore the integration test tended to accommodate this situation (Byers 2001).
The multiple test tends to look at all the aspects of an employment relationship. This tests tend to look at three requirements to outline if indeed there exists a contract of service. These include the consent by the employer to offer work in return they are accountable for the employee remuneration, the employee’s agreement to be under the control of the employer and finally the terms of being that of service. Therefore based on this test, the courts are therefore inclined to look at all aspects to analyze whether a worker is an independent contractor or an employee. In specific the courts tend to look at terms that imply the existence of an employment or those that imply the individual is independent.
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