law-ass1-2 - Contents INTRODUCTION 2 LO1 Understand the...

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Contents INTRODUCTION: ............................................................................................................................. 2 LO1: Understand the essential elements of a valid contract in a business context. .2 TASK 1.1 : Explain the importance of the essential elements required for the formation of a valid contract ...................................................................................................... 2 TASK 1.2 : Discuss the impact of different types of contract ............................................ 7 TASK 1.3 : Analyze terms in contracts with reference to their meaning and effect. ........................................................................................................................................................... 10 LO2. Be able to apply the elements of a contract in business situations ................... 11 TASK 2.1 & 2.2: Apply the elements of contract in given business scenarios & Apply the law on terms in different contracts ................................................................................ 11 TASK 2.3 : Evaluate the effect of different terms in given contracts ............................ 18 CONCLUSION: ................................................................................................................................. 19 Page 1
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INTRODUCTION: Contract law lies at the heart of our system of laws and serves as the foundation of our entire society. Our society depends upon free exchange in the marketplace at every level. Contract law makes this possible. Exchanges in the marketplace always depend upon voluntary agreements between individuals or other “legal persons”. Such voluntary agreements could never work without contract law. LO1: Understand the essential elements of a valid contract in a business context TASK 1.1 : Explain the importance of the essential elements required for the formation of a valid contract What is a Contract? A contract is the agreement between parties regarding any kind of dealings that is enforceable in law. Void Contract is the contract does not meet the following factors : Illegal, Immoral, Form. Meanwhile, the contract will not take effect and 2 parties do not need to comply with the terms of the contract. Voidable Contract is a contract cannot remain as voidable forever; rather it has to be valid or void. And contracts invalid only when a parties given the court review. These factors can lead to a voidable contract: Minor, Mistake, Coercive, Drunk. A valid contract normally contains the following five basic elements. 1. Agreement = Offer + Acceptance 2. Consideration 3. Capacity 4. Privity 5. Intention to create legal relation Agreement : Offer : An offer is a definite promise to be bound, provided the terms of the offer are accepted. This means that there must be acceptance of precisely what has been Page 2
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offered. For example, if a company tells you that it will sell people A 100 boxes of red wine at the price of $100,000, that company is making people A an offer. There are 2 types of offer: Offeror: In the example above, company is the Offeror. Offeree: People A is the Offeree. Characteristic of Offer : The offer must be communicated to the other party. Serious Intention is determined by what a reasonable person in the offeree’s position would conclude the offeror’s words and actions meant. Offers made in obvious anger, jest, or undue excitement do not meet the offer.
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