LAW OF CONTRACT Essay Example
Law of Contract
Law of Contract
A contract is defined as an agreement between two parties where one party makes a promise of doing something for a benefit called consideration. However, some elements must be present for a legal abiding agreement to be formed between the two parties. These elements include an offer, acceptance, intention to create a legal agreement, consideration, and the capacity to contract.
Offer refers to readiness to perform a particular act. The validity of an offer is limited to a given period after which it stands to be revoked or canceled. The offerer should thus include the deadline for the acceptance of an offer. John, the owner of Office Supply, made a contact with CompuHelp services seeking to know more about the services provided by the organization. Sophie, who was a salesperson, promised to send a contract to be reviewed by John after confirming that her organization provides the services John was looking for. John was offered with an invitation to treat which he signed. He was eager to enter into the contract as he had the idea that it was a sort of promotion as the hourly rate charges were nil (McKendrick, 2014).An invitation to treat is termed as a binding contract when an offer is accepted, and the subject is willing to comply with the terms of the offer. John accepted the Terms and issues of invitation to treat which was part of negotiations with an offer.
Only that which is offered can be accepted. No conditions should be present for an offer to be accepted. In case, new terms and conditions are incorporated in an offer, and the offer cannot be accepted as that is a counter offer. Acceptance of any offer puts an end to negotiations setting the terms and conditions of a contract. Acceptance of an offer may be in many forms. It may be verbal, in writing or by action. Despite Sophie receiving and failing to sign the contract, she responded to John’s call when he requested for assistance In solving a computer problem. This was acceptance by conduct, and thus there was a binding contract between CompuHelp services and Office Supply (McKendrick, 2014).
In business transactions, the contracting parties must be willing and intending to make a legal relation. This means that if both sides sign for related commercial activity, then one can sue the other party if it fails to meet the contractual requirements. If the two sides, however, do not wish to create a legally abiding contract, the above presumptions will not stand. Words like “subject to contract” and “without prejudice” should thus be printed on the contract document. Both John and CompuHelp services were readily and willing to create a legal abiding relation. This means that any breach of contract from either side calls for a legal action. John thus had every mandate to sue CompuHelp services for the violation of the contract.
The benefit given to the other party in a contract is referred to as consideration. It is the benefit awarded to the promisor and can be measured in economic terms. The Consideration need not be adequate, and the court will not intervene if one party makes a hard bargain on the product unless fraud, threat or unconscionable conduct is involved. A promise of a token is however not enforceable in a court of law as it lacks mutual exchange because the receiving party does not need to pay anything in return. In the agreement between John and CompuHelp services, the consideration was indicated as $000.00. The error was made on the side of the service providers where they mentioned zero dollars as the expected payment instead of a hundred dollars. John was not thus entitled to pay the two hundred dollars as they weren’t part of the contractual terms.
The last element that must be present is the capacity of the two parties to enter into a contract. Any person who has not attained an age of eighteen years is regarded to as a minor and is in no capacity to enter into a contract. Mentally disordered persons are also not in the ability to enter into any legal binding contract. Both John and Sophie are in the authority or ability to engage in legal contracts. With all the contractual elements satisfied, John had entered into an agreement with CompuHelp and had every right to sue for damages. There was a breach of contract from the side of CompuHelp (McKendrick, 2014).
Defenses to Breach of Contract
CompuHelp, however, has some arguments that it can use to defend itself. The agreement lacks consideration. For a contract agreement to that there must be a valuable amount of consideration that must be provided to the party offering benefits (McKendrick, 2014).The standard contract sent to John indicated that there was zero review and that the services to be offered by CompuHelp were not to be charged. CompuHelp can use this as a defense and claim that no contract can stand without a consideration and that John should not have just assumed but would have enquired more of the same.
Another defense is that the contract contained mistake that was material to the agreement and John knew or was expected to have known about the error. John should have jumped into conclusions of the zero charges and instead should have consulted for clarifications from CompuHelp services. The misunderstanding would have been cleared only if John inquired more on the nil consideration (McKendrick, 2014).
CompuHelp can defend itself by making claims that the contract was indefinite. None of the members of CompuHelp signed the deal back meaning the initial terms were never agreed upon. Sophie thus did not consider the contract to be final, and the court does not have the right to discern the particulars.
The contract between CompuHelp and Office Supply was unconscionable. This means that the deal was very unfair. A contract that included no consideration is unfair as Sophie’s company was intended to provide services and receive no payments at all. Her company has the above defenses to be presented well in a court of law by a lawyer.
Remedies to Contract
When a breach of contract occurs, the other party is at liberty to discharge itself from any further legal requirement established by the contract as well as claim damages. Upon proving a breach of contract by CompuHelp, John has many remedy responses he is entitled to claim. One of these remedies is claiming monetary compensation for any loss, damage or injury. The settlement is meant to indemnify John had there be no contract at all. Despite the fact that no actual loss occurred, John may still claim compensation though at a lower value (McKendrick, 2014).
An injunction is a fair remedy in the form of a court order that is meant to sermon a party or refrain it from particular acts. Failure to comply with an injunction leads to the individual facing criminal or civil punishments that may include monetary fines or even imprisonment. In the above case scenario, John may seek the court’s intervention to provide an injunction against CompuHelp preventing it from breaking their contractual terms and conditions. In order will ensure that the organization does not withdraw its obligations from John’s Office Supply despite the zero consideration. This is similar to an order of specific performance where the judge orders the party that has breached the contract to perform its contractual obligation (McKendrick, 2014).Contracts are created to be performed, and thus the parties involved have a collective responsibility that is performance. John thus should seek the intervention of the court in ordering CompuHelp Company to honor its contractual obligation.
Rescission is another known remedy meant to place both parties in their previous positions before they entered into an agreement. The above solution is mainly used in circumstances of misrepresentation, undue influence or even duress. John can seek rescission of the contract even before the contract period has elapsed. There was a misrepresentation of the contractual terms and thus the contract is voidable (McKendrick, 2014).
A breach of the contract calls for repudiation. It implies bringing to a halt to the contract. The remedy is only available where there’s a violation of conditions in contrast to a breach of warranty. It’s also applicable to a breach of the innominate term. John can also make a request on reformation where the conditions of the contract can be changed to show and depict the initial intentions of both parties.
The above two parties had entered into a contract, and the contract terms had to be followed to the letter. It was a big mistake on the side of CompuHelp by indicating that the expected consideration was zero. Despite the number of defenses to be argued in court in the favor of CompuHelp, there was a breach of contract. Through a lawyer, John had some remedies to claim. Compensation, rescission, repudiation, and injunction are some of them. Compensation for the breach of contract should include the money to compensate for any losses, attorney fees and costs, liquidated damages and punitive damages to deter the other party from continuing to act in that manner(McKendrick, 2014).
McKendrick, E. (2014). ‘Contract Law: Text, Cases, and Materials’. Oxford University Press
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