Elements and Requirements of a Valid Contract - Research Paper Example

Elements and Requirements of a Valid Contract. A contract is described as a voluntary agreement between two or more individuals or entities that binds them in a lawful obligation to fulfil aspects stipulated in therein. The most significant elements of a contract are the offer and it acceptance by the parties involved. Contract can either be done orally or put down in writing, which are all legally accepted and enforceable depending on the legal framework of the environment they are created. Parties engaging in a contract should not be coerced, blackmailed or threatened to enter into a contract. A contract should be a deliberate and voluntary endeavour for it to be a legally binding agreement. There are various ways in which contracts can be drawn up depending on its purpose and the parties involved with the contract. In business, written contracts are preferable due to their nature and ability to present terms and conditions for all to see. Contracts have different meanings and interpretations depending on the conditions contained therein, and they have ethical, moral and legal implications. It is important that in the process of contract formulation, the ethical, moral and legal implications of its contents should be considered. This should be done in an effort to protect the interests, rights and obligations of those directly and indirectly involved. Business contracts require a written down agreement for purposes of verification and authentication of terms and conditions of a contract’s contents. Written contracts provide the opportunity to them to be written in a precise language that explicitly describes the terms of a contract (Helewitz, 2010). This reduces the chances of misunderstanding and conflicting assumptions; there also a reduced need to refer to memory in order to remember what was originally agreed upon. A written contract is also legal representation of a verbal contract because it is assumed that what is agreed upon in a written contract was also agreed upon verbally. Contractual agreements are the most basic and essential elements of any corporate-related exchange or transaction (Wei et al, 2011). Contracts bring the parties involved in a cataract to an agreeable and confortable settlement that achieves fair and reasonable objectives for those involved. People enter into contracts in most of their daily activities with examples including renting a house, opening a bank account and when using application on mobile appliances like iPhones. Agreeing to the terms and conditions to use an application on the internet like iTunes is contractual agreement between an individual and the application provider. Contracts are drawn up for various purposes and intents, with some being simple and others complicated depending on the nature of business and activity being agreed upon by the parties involved. These include cost reimbursement contracts, fixed-price contracts, indefinite delivery, incentive, time and material, labour hour, letter, option and multi-year contracts (Andrews, 2011). There features and/or elements of contract that must be present in for the agreement to qualify description as a contract. Legal competency is a vital component of a valid legal contract, which translates to the fact that they must meet the required minimum age limit of 18 years and older depending with country (Helewitz, 2010). According to Helewitz (2010), this is meant to protect minors from entering into legally binding contract without their full understanding and knowledge of their full implications and meaning. Failure to meet this legal requirement demands that the individual must be in the company of and represented by an adult preferably their parent or guardian to act on their behalf. Legal competency also includes mental stability/capacity or sanity, which requires that parties involved in the contract must be psychologically and intellectually fit to fulfil the terms and conditions stipulated by the contract. Individuals under the influence of drugs or lack the mental capacity to fulfil the terms and conditions of the contract are excluded from participating. A contract represents a mutual agreement, consent, assent or the meeting of minds between individuals (Wei et al, 2011). This indicates that the parties involved in a contract fully agree and are not forced in any way to participate in the contract. The terms and conditions of a contract agreement must be comprehensible to both entities involved, and it should never be vague, awkward, misleading or erroneous. Elements of a contract that make it a mutual agreement are the offer and the acceptance, which requires both aspects be acknowledged and accorded appropriate action. This acts as a sign that both parties are in mutual consent and wilful agreement to the terms and conditions of the contract. Contracts should be executed for a legal objective, and must not involve any unlawful activity or intent. Consideration is an important aspect in a contract for it makes it valid and enforceable. This entails the need for there to be an entity of value that is given in exchange for goods or services (Helewitz, 2010). According to Wei et al (2011), consideration is an element of contracts that works to induce, bring in or involve the other party into a contractual agreement. Consideration includes currencies and/or items that have monetary value to both entities involved in the contract, without the contract cannot be considered valid. Value consideration is illustrative of the fact that the involved item has monetary value, and good consideration is construed to mean that the item involved is considered by either party (Miller & Cross, 2008). Privity of contract entails the involvement of third parties in the liability of a contract’s terms and conditions. This is in the sense that an entity in an agreement who acts on behalf of one of the involved parties bears liability for the terms and conditions of the contract. The ethical and moral consideration of this aspect in contractual agreements requires insightful consideration before engagement. Viewing contracts from a moral perspective requires one to reflect on social promises that people make on a daily basis in the lives. Promises made to friends and acquaintances have the same elements as those found in what is considered to be legally binding contracts yet they do not require legal action or interpretation when they are flouted. The same principles that bind people to promises are similar to those that bind people to business contracts. The only exception being that business or professional contracts are mostly written down and are enforceable by the rule of law. On the other hand, promises are considered superficial since they made between friends, and there is no consideration to be lost or gained through default. Failure to acknowledge promises as the foundation of legally binding contracts in business and other professional occupations negates the purpose and practicality of contracts. The need to live up to or fulfil a promise to a love one or a friend is the foundation upon which professional contracts are founded upon and there is significance to recognizing this fact. Strengthening this moral obligation in society would strengthen the value of contracts beyond the monetary value they carry and represent to those involved. It would reduce instances and cases of contract breach by giving individual moral obligation to uphold contract terms and conditions over greed and the love of money. Contract law exists to justify and bolster the moral obligation and institution of promises by either facilitating the social benefits accrued from this institution or by protecting and vindicating those involved (Andrews, 2011). According to Andrews (2011), these laws provide support and recognition for a valuable relationship and their reasonable expectations of legitimate public concern. Contracts should be based on the doctrinal principles that enhance and support the moral practice of promising. This protects those involved not only of their vested interests in the contract but also helps them retain their integrity and stance of fidelity towards their promises (Miller & Cross, 2008). Taking this perspective could be a useful insight to scholars, judges and lawyers who are involved in formulating principles of contract law. This would be by way of gaining useful perspectives on the importance of perspectives to promises, promisors and the society at large (Wei et al, 2011). However, this does not mean that the legal and moral treatment of promises vary substantially due to the fact that the law has a wider perspective than morality. The law’s reach and scope might be wider than that of morality, but it is narrower in another way. In today’s societies, the law’s efforts of enforcing morality are limited to what facilitates political and social life (Helewitz, 2010). Andrews(2011), states that contracts should strive to enforce promises, which can be used to inform the proper design of contract principles and doctrine. Ethics that are concerned with drafting, enactment and enforcement of contracts take the general perspective ethical behaviour and considerations that are practiced in society. Any aspect that is deemed unethical by society also qualifies as an aspect that should not manifest itself in contractual activities. Ethical standards determine individuals’ perception and opinion about right and wrong, and they go a long way in promoting the collective interests of those involved in a contract. Ethical standards are significantly influenced by cultural factors that determine the moral and ethical orientation of participants with regard to what is right or wrong. Durable contracts are characterized by having participants who continually endeavour satisfy the terms and conditions set out in a contract (Miller & Cross, 2008). Participants in contractual agreements should not be allowed to use cultural disparities that exist between them with regard to right or wrong as a basis for breach of contract. Therefore, contracts should be formulated to be as durable as possible by sealing legal, ethical or moral loopholes that might be used to cause contract breach. There are a multitude of ethical and moral challenges that face contractual agreements depending on the scope and purpose of a contract. Ethical frameworks ensure that contracts and parties involved observe their contractual responsibilities and obligations. Economies that provide competitive environment for obtaining and satisfying contracts ethically are indicators of an efficiently functioning economy (Miller & Cross, 2008). Unethical behaviour in contractual agreements leads to loss of contracts and trust from that one conducts business with in the market. It is ethically appropriate for price considerations to be set a manner that is reflective and fair of both parties involved in the contract. Cost of profits and market levels are some examples of ethical consideration that goes into ethical considerations in contractual agreements. Ethically negotiated contracts provide a balanced deal for both partied involved in a contract, which accrues benefits for them without the chance of encountering any problems. Conflicts of interests are mostly unethical and unacceptable in any manifestation of a contractual agreement, and this phenomenon is avoided through transparency by both parties involved (Wei et al, 2011). Declaring a conflict of interest in contractual matters is a manifestation and classic example of sound moral judgement and ethical behaviour. Fair competition is ethically correct and appropriate, where contracts are obtained through competitive bidding. A contract that offers fair consideration through pricing or quality or goods and services provided is of value to both parties and society. Technology has revolutionized the way that people communicate and conduct business, which has contributed to making the world a global village through instant communication from any region of the world. This has created a situation where the integrity and safety of contracts from risks such as forgery and duplication have increased significantly. Contracts are drafted and formulated in one part of the world and signed in another completely different part of the world. This requires that those involved in these contracts device mechanisms and security measures that ensure that these processes are not compromised. The lack of face to face contact that is characteristic with conventional contract agreements; calls for more drastic measures to assure the parties involved of each other’s commitment to deliver on their obligations and promises. The role of ethics and moral consideration remains important and crucial even in the event of technology, but it poses more risk to that regard. Conventional contract agreements involve physical contact between signees, where assurances can be made formally or informally. There is the perception that technology acts as a third party or conduit that is not liable to any consequences that might accrue from the signing of a contract. Individuals of a conservative nature illustrate reluctance when it comes to signing online contracts and they prefer traditional contractual agreements where there is physical contact with all parties involved. Technology provides invaluable benefits in business, but there should more effort at minimizing the risk of entering into invalid and damaging contracts. The integrity of written or verbal contracts should be maintained at all times and it falls within the responsibilities and obligations of all those involved. This aspect lies within individual’s moral principles which it their moral and ethical obligation to protect the terms and conditions of a contract. Integrity translates to honesty which is founded on sound morals and ethical considerations of the purpose and needs of parties involved. Contracts are mutual agreements between individuals in their own capacities or as representatives of other entities. The need for integrity is paramount in contractual agreement for there to be a meaningful outcome and accrual of benefits for all those involved. The legal enforcement and protection of contractual agreements by the law have a limited function especially where ethics and moral consideration is concerned. The grounding and the basis of contractual agreements should be founded on principles behind social promises ass outlined in social contract theory. This ascertains the integrity and effectiveness of a contract’s terms and conditions to all the parties. The impact of technology on contractual agreements is acknowledgeable and appreciated, but there should be more efforts to ensure that it does not increase risks for those involved. Legal interpretations and representation of contracts should not be done in a manner that negates its ethical and moral considerations. References. Andrews, N. (2011). Contract Law. London: Cambridge University Press. Helewitz, J. A. (2010). Basic Contract Law for Paralegals. Revised Edition. Colorado: Aspen Publishers Online. Miller, R. & Cross, F. (2008). The Legal Environment Today: Business In Its Ethical, Regulatory, E-Commerce, and Global Setting. 6th Edition. London: Cengage Learning. Shiffrin, S. V. ARE CONTRACTS PROMISES?. Wei, Y., Furia, C. A., Kazmin, N., & Meyer, B. (2011). Inferring better contracts. In Proceedings of the 33rd International Conference on Software Engineering (pp. 191-200). ACM. Read More