In every day, people enter into contracts without noticing. For instance, when we take seats in a certain bus, we enter into a contract but we do not realize. Going into a restaurant and taking snacks also amounts to being into a contract. In cases of individuals engaging in commerce, industry, or trade, they carry on their businesses through entering into contracts. Law of contracts actually varies from the other divisions of law in very crucial respect. This law does not essentially lay down many rights and duties that are precious and which it will enforce and protect. Rather, it contains some limiting principles that the parties in a contract may create duties and rights for themselves, and this law will actually uphold those duties and rights.
Our writers will create one from scratch for
A contract is thus an agreement that possesses a certain lawful object, which is entered into voluntarily or without being forced by 2 or more competent parties, each of whom anticipates creating a single or more obligations between them. These obligations must be legal. Contracts are normally written but they may be implied or spoken, and have to do with sale or lease, employment, or tenancy. It is interesting to note that parties to a given contract make laws for themselves. Provided that they don’t in any way transgress a number of legal prohibitions, they have the ability to frame any rules that they like in respect to subject matter of the contract that they are in hence the law will in actual sense give effect to that contract (Keenan 2007).
The two main elements of a contract are that there must be a legal obligation and an agreement offer. There are some more main elements that are essential for a contract to be valid. The Act states that, “ All agreements are contracts if they are made by free consent of parties, competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void.” For that reason, the following elements must be present for a contract to be considered as valid.
First and foremost, there must be an agreement. In contract, an agreement is made up of 2 elements which in this case are acceptance and offer. The offeror is the party that makes the offer while the party or parties to whom that offer is made is referred to as the offeree. For that reason, there have to be 2 parties to a given agreement in a contract. In addition, consensus ad-idem must be present in such an agreement (Koffman 2007). The other element is that there must be an intention by the two parties in an agreement to create a legal relationship. A domestic nature or purely social agreement does not constitute a contract. For example, in [Balfour v. Balfour (1919)2 K. B. 571], a husband agreed that he was going to pay £30 to the wife each month when he was abroad. The wife sued him when he failed to keep his promise. The court ruled that she couldn’t recover the amount since that agreement was a social agreement and also the parties failed to create legal relations in their agreement.
The other element for a contract to be valid is that there must be a genuine and free consent. The parties’ consent should in fact not be obtained through fraud, coercion, misrepresentation, undue influence or mistake. Thus, if consent is essentially obtained through any of the mentioned flaws, that contract is not valid. The other element is that the parties to a given contract must be competent to enter such a contract. This element is also referred to as the capacity to contract (McKendrick 2007). For that reason, the parties to a contract should possess the capacity to contract. Section 11 says that a person who has attained age of majority, is not disqualified from entering into a contract, and is of sound mind is competent to enter into a contract.
Lawful consideration is the other element for a contract to be valid. The agreement should be supported by the consideration on the two sides. This means that every party to an agreement must give something or promise and receive a promise or something in return. A promise that is not supported by the consideration is a bare promise or nudum pactum and at law it is not enforceable. Another element is that the object of an agreement must be a lawful object. The other element that makes a contract valid is that of certainty of meaning. This means that the regulations and terms that that are made in a particular contract must be clearly stated so as the parties to a contract will be in a position to understand them.
Binding and enforceable nature of contracts
Furthermore, a binding and legally enforceable contract can either be in verbal (oral) or writing. Depending on nature of the involved transaction, the law requires some types of contracts to be in writing so as to be enforceable. Verbal contracts are also enforceable especially in the situations where a given party to a contract has performed the obligations that he or she is required to perform.
Voidable and Void contracts
A voidable contract is a valid contract. However, this type of contract can be rendered unenforceable due to some legal reasons. These reasons include a misrepresentation or fraud, failure by the two parties or a single party to disclose a given material fact, duress or undue influence, breach of contract, presence of unconscionable term(s), legal incapacity of one party, or a mistake. Consequently, one party in a voidable contract may reject it hence it is said to possess a defect (Keenan 2007). However, given that the party possessing the power to reject a voidable contract chooses not to reject it despite its defects, this contract becomes valid hence enforceable. This party will thus be adversely affected.
On the other hand, a void agreement or contract in real sense is not a contract. This is a contract that cannot be enforced by the law. These contracts are actually different from the voidable contracts, which may be nullified. An agreement that is intended to commit an illegal act is a good example of a void agreement or void contract. For instance, a contract between the drug buyers and dealers is a void agreement because its terms are illegal. In this case, a party cannot go to the court to enforce this contract. In addition, a contract can be void given that there is impossibility in the performance. Furthermore, a void contract is the one that lack any prerequisite of a valid contract such as contractual capacity, consideration, offer and acceptance among the others. Uncertain terms also make a contract to be void. As a result, this contract is naturally unenforceable.
A party that is innocent to breach of a contract is actually entitled to the damages in form of compensation for his or her loss. Depending on breach seriousness, he or she may be entitled to end that contract in addition to claiming the damages. The 5 basic remedies for the breach of contract are restitution, money damages, reformation, rescission, and specific performance. Restitution is essentially a remedy that is designed to restore injured party to position that he or she occupied prior to contract formation (McKendrick 2007). Instead, this remedy aims at returning to plaintiff any property or money given to defendant under the entered contract. The plaintiffs normally seek this remedy when the contracts that they entered are actually voided by the courts due to the incapacity or incompetency of a defendant.
Damages signifies sum of money that is awarded as compensation for the injury that is caused by breaching the contract. The extent of damages that are to be awarded is governed by the breach of contract. The aim of this remedy is essentially to enable the party that is innocent to get monetary compensation from that party that breached the contract. Reformation is actually a an equitable remedy, which is applied when written agreement fails to correspond to the original contract that was formed by both parties, resulting from mutual mistake or fraud in drafting original document.
Rescission is a remedy that terminates the contract. Therefore the parties to a contract are restored to position of never having been into any contract in first place. Last but not least, specific performance is also an equitable remedy through which a contracting party is needed to execute a promised performance when the monetary damages would actually be insufficient to compensate for the contract breach (Willmott, Christensen, and Butler 2005)
Question 2 From the above discussion, it is obvious that Lee and Tom were in a voidable contract. Their contract is valid since it possesses the basic elements of a valid contract such as an acceptance and offer, free and genuine consent, competent, consideration, and certainty of meaning. The two parties to this agreement are competent since they have the capacity to contract. Therefore, despite this contract possessing the mentioned characteristics, it is a voidable contract. This is true because it is on the grounds of mistake, fraud, and misrepresentation. Tom is dishonest a fraud party to this contract. This is because he presents a false statement of the material fact of this contract. By refusing to disclose the other copy of the contract, he fails to present all the material fact as required by the law (Koffman 2007). The document that he fails to present to Tom proves this.
In addition, Tom knows that his statement about Tom sleeping in the premises is not true because he cheats him that he used to sleep in the premises before and there is no any problem with Lee doing that. It is obvious that his intention in this contract is to deceive Lee and make him sign the contract. This fraud leads to the injury of the victim who in this case is Lee. The false statements by Tom relate to a material fact. They substantially affect Lee’s decision to enter into this contract since they are made with the intention of deceiving him. It addition, according to Lee, the statements are untrue (Keenan 2007). He had entered into this contract both in writing and verbal hence he believed in everything that Tom told him.
Furthermore, this contract is on the grounds of misrepresentation. This is because Tom told Lee that there is no problem with him sleeping in the restaurant but according to the Health and Safety Inspector this is wrong. Therefore, this misrepresentation creates a civil liability. Lee also by mistake enters into this contract. He mistakenly signed it when he did not see the other document.
Thus, as Lee’s lawyer, I would advise him to reject this contract since he has the right to cancel it. It is important for him to make it void as soon as possible because it will continue to remain both valid and binding. He should therefore avoid this contract because it has defects (Willmott, Christensen, and Butler 2005). Lee thus has the right to sue Tom for breaching their contract. Additionally, contractually he is not bound to wash the car. This is because the document that contained this agreement was not presented to him at the time when the contract was being made. Tom was required to present to Lee this document, which they are also supposed to have sign. He is also bound to get the remedies because he entered into this contract both in writing and orally and I do not see any mistake with him.
Keenan, D. J., & Riches, S. (2007). Business law. Harlow: Pearson Longman.
Koffman, L., & Macdonald, E. (2007). The law of contract. Oxford: Oxford University Press.
McKendrick, E. (2007). Contract law. Basingstoke: Palgrave Macmillan.
Willmott, L., Christensen, S., & Butler, D. A. (2005). Contract law. South Melbourne, Victoria, Australia: Oxford University Press.