Contracts are legal agreements between the parties to keep the promises that they had made to each other regarding sale of goods or service agreements. Contracts are made when one party offers something to another and the offer is accepted. An organization offering a job to the candidates and their acceptance of the offer results in a contract. These employment contracts are among the most common types of legal agreements.
Types of Contract:
In the business world, we usually come across simple contracts that can be formed in writing, orally or with action. One of the basic types is bilateral contracts, where both entities agree to uphold the agreement. When one individual promise something to the other and that person agrees to give something in return, they enter into a bilateral contract. Unilateral contracts are another type of agreements where one entity promises something to the other for the action that benefits the first party. Deeds are the handwritten contracts that are sealed with the signatures of both involved parties and a third party as a witness of the contract. In order to understand contract law, we have to go through the basic elements that need to be taken into consideration while making a contract.
Offer:
The first step in formation of a contract is to extend an offer that highlights the details of the agreement and its terms and conditions. The offer is an attempt to enter into a contract with the other party.
Acceptance:
Once the offer has been made now it is up to the offeree to either accept or reject the proposal and its terms and conditions. This can be done through mail, email or verbally. The acceptance needs to be clearly state that the offer is accepted by taking into account all the terms and conditions of the proposal.
Mutual Agreement:
The mutual agreement between the parties suggests that both the parties have recognized the contract and agreed on its terms and conditions. The meeting of minds, genuine agreement, mutual assent and consensus ad idem are other terms used in contract law to refer to this moment.
Consideration:
In order to enter into a valid legal agreement, something of value must be exchanged to avail the offers. Mostly, money is used to get things like products, property, protection, or services. If not trading in money, it is essential to ensure that whatever they are trading is also valuable.
Capacity:
Both the parties involved in the contract must possess the legal capacity of entering into the contract in order for it to be considered valid. Both parties must enter into the contract with their right mind as a valid agreement could not take place if one party is taking decisions under the influence of any mind-altering substance. This also suggests that desire of both parties to enter into the agreement is vitally important to form a legally valid contract.
Legality:
Contracts can only be created to govern the trade of legal products or services. While trading illegal products or services, the offeror cannot enforce a contract if the offeree is not exchanging any consideration. Each party needs to show its legal content while making the contracts. This means that the result of their contract would be completely legal. A contract follows some general terms that form the basis of an agreement. These terms can be referred to as contract conditions or contract warranties. Contract conditions are vital to the agreement. If these conditions are not met, contracts can be terminated.
Contract warranties are less significant terms and it is not possible to terminate a contract if the warranties are not fulfilled. You can also seek compensation for your losses if the agreement fails to fulfill contract conditions and contract warranties. The conditions of the contract must be clearly defined and agreed by all the parties while negotiating the contract terms. These are some of the basic aspects of contract law that can facilitate you and provide you in-depth knowledge while you are working on the coursework of the particular subject matter. It is very important to understand these elements to ensure the success of your assignment.
