Contracts and Legal Environment of Business

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Contracts play a significant role in the business environment because they regulate the relations between different parties with references to the legal aspect of these relations. Thus, a contract is the specific “legally enforceable agreement between two or more competent people” (Ashcroft & Ashcroft, 2014, p. 48). The simple character of this definition allows speaking about the variety of daily and business contracts which are based on such two important criteria as the law and agreement. Nevertheless, contracts are essential in the business world that is why ten main principles associated with the nature of contracts should be discussed in detail to use contracts effectively.

Validity of the Contract

The validity of the contract is the most important thing associated with the issue. To be discussed as valid, the contract should be worked out according to such requirements as the mutual agreement of the competent parties and the contract’s organization according to such formal requirements as “being in writing or under seal” (Ashcroft & Ashcroft, 2014, p. 49). If I notice that the party refuses to provide the definite type of a contract in a written form, I can reject the following discussion of the contract because of impossibility to test its validity.

Role of the Offer and Acceptance

It is possible to speak about such an agreement as the contract when one party “makes an offer and the other party accepts the offer” (Ashcroft & Ashcroft, 2014, p. 57). Thus, to make a contract, I should develop and propose an effective offer which is expected to be accepted by the offeree.

Role of Capacity to Contract

The agreement will be “enforceable at law” when all the parties making a contract are discussed as having the contractual capacity (Ashcroft & Ashcroft, 2014, p. 68). Thus, the parties should have the legal and mental capacity to contract. Before making a contract with the person who is discussed as a minor because of being under the contractual age, I should check the law and statutes followed in the concrete state properly because of state differences in discussing the issue.

Role of Consideration

The contract is not valid, if the price for a promise is not stated. Thus, consideration is “what promisor requires as the price for a promise” (Ashcroft & Ashcroft, 2014, p. 78). Exchange of promise for the other promise explains the nature of the contract. To make the contract valid, I should state clearly what amount of money I expect to receive after signing the contract associated with the selling procedure.

Role of Mistakes

The properly worked out contracts can be invalidated because of definite mistakes. To invalidate the contract, the mistake “must be a mutual one about a material fact” (Ashcroft & Ashcroft, 2014, p. 88). Mutual mistakes in contrast to unilateral are made by both the parties. That is why, I usually check all the aspects of the contract twice in order to avoid unilateral mistakes and prevent mutual ones.

Role of the Lawful Purpose

The contract is valid and legal when it is made for the lawful purpose. Thus, it is prohibited by law to make gambling and usurious contracts as well as contracts of the unlicensed operator (Poole, 2012, p. 56). Knowing about this aspect, I can prevent making the contracts with unlicensed operators while checking all the associated details before making an offer.

Role of the Third Party

To make a contract, a person should know the difference between the assignment and delegation of duties to the third party. Thus, third parties “may acquire rights or assume duties” (Ashcroft & Ashcroft, 2014, p. 121). The assignment of rights is realized to a person instead of the party. Delegation means the transference of duties without stating the rights. I can delegate the duties associated with the contract to my assistant, but this situation does not mean the assignment of rights.

Role of the Intent

All the parties should have the intent to make the agreement in the form of the contract in order to discuss the contract as valid. If the parties do not demonstrate the intent to make a contract, the agreement is not reasonable in this case (Poole, 2012, p. 41). To guarantee the development of an effective contract, I should be sure that the party also has the intent to sign the contract.

Differences between Unilateral and Bilateral Contracts

Unilateral are the contracts based on one act related with the situation of the promise when bilateral contracts requires the agreement on the mutual exchange of promises (Poole, 2012, p. 34). The knowledge is important for me to choose the most advantageous variant of the contract to make.

Role of Disaffirmance

The party has the right for the repudiation of the contract, especially if the party is discussed as the minor (Chen-Wishart, 2012, p. 112). The knowledge of this fact helps me predict the situations when the minor can choose this path of actions, I can take actions to revise the contract’s terms.

Conclusion

The discussed ten important factors and principles about the aspects of the contract law should be examined in detail in order to provide businessmen with the opportunity to make effective valid and legal agreements as the part of their daily business activities.

References

Ashcroft, J., & Ashcroft, J. (2014). Law for business. Mason, OH: South-Western Publishing. Web.

Chen-Wishart, M. (2012). Contract law. USA: Oxford University Press. Web.

Poole, J. (2012). Textbook on contract law. USA: Oxford University Press. Web.

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