Unit 21: Aspects of contract Law: Assignment 1: Task 1(P1, P2, P3,
Criteria and Formation of a Contract
When constructing a legal contract, there are four elements that
must be met to make the contract legally binding. These four elements are as
follows; offer, acceptance, consideration and intention. An offer is a promise/ guarantee in exchange
for a service or good from an opposing party. A counter offer can happen when
negotiation happens to build on the original offer. The person or party who proposes the
offer/contract is often called an offeror in the terms of the law. On the other
hand, the person or party who receive the offer are sometimes know as an
offeree. Consideration is the bargaining within the contract, within a contract
both parties must include a promisor and a promisee, they must receive a benefit,
and both will suffer a detriment. Consideration must
be something of value in the eyes of the law – (Thomas v Thomas) (1842). There are various rules that govern weather
something can be classed as consideration, these are as follows; the
consideration should not be passed, the consideration must be sufficient but
not be adequate, the consideration must move from the promisee. Intention is to
be intention bound and enter a legally binding contract. Acceptance occurs when an offeree agrees to
be mutually bound to the terms of
the contract by giving
consideration. Without the acceptance stage of a contract, a contract can be
nulled and not legally binding.
Now with the case study, I will Look at weather the legal criteria
of the contract is met?
Starting with offer, no official or legally binding offer has been
made, due to the fact when Sarah stated, “if Dan ever needs a bit of gardening
work done he should give her a shout” she never specifically says how much a
bit of gardening accounts to in the sense of manhours or cost of the labour and
items charge. The offer must be specific, to make the offer legally binding she
should have stated how much work she would do in exchange for something. For
example, Sarah could have said, she’d do fifty pounds worth of gardening for
eight pints at her choosing in Dan’s pub. Dan is not at fault with this
original offer since it has economic value.
Moving on to counter offer, Dan email says “I’m really excited to
finally get my garden sorted so I’d like to take you up on your offer of the
gardening work. I’d really like a new lawn laid and some flowerbeds planted
before the summer starts but the main job will be to lay a patio outside of the
back door.” Which to start with he mentions taking her up on her offer, which
is already nulled since it isn’t legally binding. Dan then goes on to list
things he wants Sarah to do in his garden, which can’t be measurable or are not
For this case study there is no consideration due to the fact,
neither party properly discuss the benefit they will each receive, nor is the
offer or consideration sufficient enough to be classed as a contract, since the
offer is a very simple suggestion that does not include the information
necessary to make a choice. To make this a legally binding contract through
consideration, there needs to be a clear benefit for each party shown, and the
considerations needs to be sufficient enough.
Again, for this case study, there is no sign of acceptance, nor is
it possible to accept the terms present. The lack of offer and consideration
make this contract nulled and making any choice of acceptance void. Nor did Dan
reply straight away agreeing with the terms, he instead wrote an email, which
contain elements that would benefit him, that were not priory discussed. The
email Dan sent would be a counter offer, if the first offer was legally
binding, if the counter offer was legally binding, Sarah hasn’t accepted the
new terms yet, meaning no acceptance, no contract.
The original offer, all the way to the email sent by Dan, were not
legally binding. Nor would they be a correct contract so to speak, since there
fall under the friends and family category, which puts them in a domestic
contract. Meaning no legal contract has being made between Dan and Sarah. The
contract was not written, this is not a problem in the eyes of law, since many
contracts can and are made verbally, however it is hard to prove that an offer,
consideration and acceptance were made when using an non-written contract. I
would advise that to make the contract more reliable that it would written
down, since proving acceptance and creates a track record in case anything
needs t0 be taken to court.
The legal definition is:
‘a false statement of fact (not law) made by one party to another
before the contract is made to induce the other party to enter into it’.
Basically, you can not just press charges for someone lying, only if the lie
would have changed your overall decision.
There are three factors of misrepresentation: Statements of opinion,
statements of intention and finally silence and omission. Starting with
statement of opinion, these are generally not actionable as misrepresentation,
however by providing a certain opinion one of the possible parties may be
represented that they have a further knowledge about certain things. A basis of contract can be formed if someone
suggest to another party something to be true, that is there opinion. For
example, a car sales man saying this is the best car of the year, but he might
not have driven ever single car from this year. Moving on to statements of
intention, any statements that holds any future intention are not useable
actionable representation, therefore if a party fails to provide an intention
that was stated in the past there can not be done for misrepresentation,
although any present actions can be actionable. Finally silence and omission, only in rare subjects of contract law, for example partnership
or insurance contracts is there a duty of utmost good faith by which both sides
are meant to disclose to each other all material information.
This means that you cannot avoid
mentioning something that may make the other party reluctant to contract.
There are three types of misrepresentation, Fraudulent, negligent,
and finally innocent misrepresentation.
party can be countable for fraud if they make any such statement that they
fully know is flash, and completely do not belief in what there are saying.
example, an injured party could potential reject the contract made, and even
worse sue for any damages made to the party.
party can be liable for this type of misrepresentation if they make a
incorrect statement, and there have no legal stand point to believe in what
there are saying, this is under the misrepresentation Act 1967. To proof the
party is not in the wrong the defendant must show no liability and that they
have reasonable belief of accuracy in the statement
is a false statement made by a person who had reasonable grounds to believe
it was true, not only when it was made but also when the contract was entered.
To fix this, usually the contract is rescinded, the injured party again also
has the right to claim damages for misrepresentation. For example if you sell
your phone, with a true belief it is in fully working order, then after the
contract was formed there was actually a problem.
Mistake: This is where someone beliefs something to be true, in
fact it is incorrect. It is normally based on someone’s belief. As well usually
when both parties are mistaken about a certain fact, one of the party may have
the contract voided.
Duress: This is an unlawful coercion usual by the stronger party to
induce the weaker party to enter a contract, this can be done by threating
Undue influence: Undue
influence occurs when one party exerts on another party any pressure or
influence, which subsequently induced that party to enter into the contract. There
are two different types of undue influence which exist: actual and presumed.
• Actual undue influence happens when one party to a contract inflicts illegitimate pressure onto
the other party in order to take advantage of that party.
• Presumed undue influence, on the other hand, happens when the relationship between parties
itself suggests influence has/could be leveraged, the contract/transaction
cannot be explained by the nature of the relationship, and the contract is
obviously not to the benefit of the vulnerable party.
Dan could have been mistaken for Sarah’s offer, in which he
thought he would getting any gardening he required, regardless of manhours or
cost of the products being used.