The Three Elements of a Contract

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Table of Contents

Introduction
Issue
Rule of law
Application
Conclusion
References

Introduction

Jarrad works in a shop owned by Duncan, his father. One of Jarrad’s duties is to keep the shop clean. Duncan is becoming increasingly annoyed at the dirty state of the shop and thinks that Jarrad is not working hard enough. To motivate Jarrad he offers him an extra £30 a week. For the next month Jarrad carry out their side of the deals. When he ask Duncan for the money he refuses and says he is only doing him jobs anyway.

Issue

Looking at this case, a number of issues arise which must be addressed so that we can ascertain who is in the wrong. The first thing we must look at is to determine whether there exists a contract between Jarrad and Duncan that is legally enforceable. In this case we need to clearly understand whether the intent to enter into this contract is of a nature that can be termed as legally enforceable or it was just a family relationship between a father and his son.

The other issue that emerges from this case is that of default of payment. If at all the contract between Jarrad and Duncan was legally enforceable, then has Duncan breached the contract by refusing to pay Jarrad the sum of money that is needed? To clearly solve this case, we will have to look at what the law says about the issues at hand (Stone, 2009, p. 102).

Rule of law

The above issues are all addressed under contract law. A contract formalizes an agreement between parties relating to a particular issue. For a contract to be enforceable, it must cover three aspects otherwise it will not be legally binding. In the first place, there must exist an actual agreement, which should have an offer and also an acceptance.

An offer can be an act or a statement carrying terms and conditions that allow the other party to enter into contract by accepting the terms and conditions. When the offer is valid then the other party will accept by saying or doing something (Adams, 2008, p. 47). The second aspect is that the contract should carry the intention to be bound legally. The third aspect is that of consideration, this simply means that a contract should carry a bargain if not then it should have an exchange of value between the parties involved.

A Consideration does not necessarily need to be adequate, but it should be sufficient. However, performing an existing duty or promising to do something that is already in existence is not regarded as good consideration under common law. A contract under such a situation may not be legally binding or legally enforceable (Beatty et.al, 2009, p. 141)

Application

These issues can be seen in this case. In the first place, an offer was made by Duncan to Jarrad. After seeing the dirty state of his shop, Duncan offers Jarrad £30 a week as a motivation to work hard. There is also acceptance of the offer. Being a unilateral contract, performance is enough to indicate that the offer was accepted. The third aspect of a contract is also met in this case. There is a consideration as seen in the payment agreement. In legal terms, we view consideration as a price. It is required by law that every promise should be paid for it to be legally enforceable (Gulshan & Kapoor, 2011, p. 11).

Both Jarrad and Duncan have met the elements of a contract, however, the question arises, is this contract legally binding or it is just a family issue? To answer this question, we have to look at the intent of the contract. It is usually presumed in law that when two parties are in a commercial relationship, then they intend to enter into a legally binding contract when they form an agreement.

If the is domestic or social in nature, then it is presumed that the intention of their agreement was not to form a contract that is legally binding. The consideration in this case is also not valid because Jarrad agreed to perform an existing duty (Koffman & Macdonald, 2007, p. 59).

Conclusion

The issue at stake in this case was to determine whether there was a contract between Jarrad and Duncan that was legally enforceable, and if so, was Duncan in breach of that contract by refusing to pay Jarrad the agreed amount. Under the rule of law, we have seen that all the three elements of a contract were met. There was an offer, an acceptance and a consideration. However we can presume that the contract between these two was that of a family nature.

Therefore, I can advice Jarrad that the arrangement between him and his father was just a family agreement and not a legally enforceable agreement. Furthermore, even if it was found out that the contract was legally binding, then the issue of consideration will rule out any chance of him making any claim because he agreed to carry out an existing duty that is regarded as not being a good consideration under the general rule.

References

Abbott et.al. (2007) Business Law. New York, NY: Cengage Learning EMEA.

Adams, A. (2008) Law for business students.. UK, London: Pearson Longman.

Beatty et.al. (2009) Introduction to business law. New York, NY: Cengage Learning.

Chandler & Brown. (2007) Law of contract: 2007 and 2008. London, UK: Oxford University Press.

Gill, J. (2010) Business Law for the Entrepreneur. New York, NY: arima Publishing.

Goldman & Sigismond. Business law: Principles and Practice. New York, NY: Cengage learning.

Gulshan & Kapoor. (2008) Business Law Including Company Law. New York, NY: New Age International.

Koffman & Macdonald. (2007) The law of contract. New York, NY: Cengage Learning.

Mulcahy, L. (2008) Contract law in perspective. New York, NY; Taylor & Francis.

Stone, R. (2009) The Modern Law of Contract. New York, NY: Taylor & Francis

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