Principles of a Legal Contract - Coursework Example

Contract Law Introduction The first situation is where Roger hires a television set for his beauty shop. A legal contract if formedbetween him and Teleland Plc upon his signing the document. The hire is governed under the legal contract of hiring and leasing of equipments. The second situation is where Rogers makes a contract with Cindy a carpenter for repair and maintenance.1 They have a contract which contains a clause concerning the liability of a defective workmanship being limited to a refund of the price involved. Actual considerable damage happens following the defective workmanship of Cindy and the television set hired from Teleland Inc is also destroyed. The two situations involve contracts that are governed by observance of There are therefore various legal principles that will govern the two situations to have involved formation of binding contracts. A contract is defined as an agreement made between two or more parties that is legally binding. Parties to a contract usually expect a win-win situation where they can both benefit from the contract. However the there is usually no certainty for both parties to attain this situation.2 One party may end up having a legal liability towards the other party. Legal Principles Any contract made whether in an attorney’s office or just written by the involved parties is valid and binding provided that the legal principles involved are understandable to both parties. The contract becomes valid on the acceptance of an offer, provided it is in compliance with the laws of the state. The first principle is the legal capacity which for many states the parties are expected to have attained the majority age of 18 years. The parties are as well expected to be in their sound mental capacity to understand the terms of the contract and consequences for non performance.3 The party representing a business organization is in a position to sign the contract thus binding the business to the contract.4 The second principle is the offer and acceptance. A contract comes to existence upon acceptance of the offer. A person may reject an offer and opt for a counter offer if they fail to agree to the terms allowed. Once accepted, offer can be revoked at any time. A contract is therefore formed on acceptance of offer or counteroffer by both parties. The third principle in formation of a legal contract is the exchange of value or consideration. This is the payment made for the performance of the contract. Consideration may be anything valuable for instance cash or goods and services. Where the consideration made is not stated or inadequate, the court may render the contract to be unenforceable. The final principle is the legal purpose. A contract ceases to be binding if it is made for an illegal purpose. Only those contracts that are made for legal purposes are binding.5 Legal Advice to Roger From the legal principles established in the law of contract, it is evident that a binding contract exists between Teleland Plc and Roger. This is because all the principles are seen to have been fulfilled. First, the legal capacity of both parties is attained since both are of sound mental capacity and of majority age. The second principle is also attained since the offer is viewed to have been accepted upon the signing of the contract by Roger.6 This shows that he accepts the terms that are contained in the agreement. For the principle concerning the exchange of consideration, the contract is still binding since Rogers agreed to the payment of some amount of money so as to acquire the use of the television set. Finally the contract is binding since the purpose for its performance is legal. However, the terms and conditions, either explicitly or impliedly included in the contract agreement are responsible for determining Roger’s liability to Teleland Inc, following the explosion of the television set.7 Under the legal Act of hiring and leasing of equipments, Rogers is responsible for the repairs of the equipments in his premises under leasing or hire agreement. However, from the terms and conditions of this particular agreement, there is a clause that implies a limitation to liability protection. The fact that this clause is written on the desk and at the back of the receipt does not limit its effectiveness. It indicates that the liability of the company for defective products is limited to the cost of repair only. Rogers therefore will only be liable for the repairing cost of the television and not any other cost.8 In the second situation, the contract between Cindy and Roger is as well binding, since it meets the principles which are the legal capacity for the contract whereby both parties Cindy and Rogers are of sound mental health and of majority age, acceptance of the offer following both parties acceptance, exchange of consideration which involves the attributable monetary value to be paid to Cindy on replacing the sign, and legality of the performance whereby the act to be performed in the contract is legal. However, the defective workmanship of Cindy causes a significant damage not only to the new sign but to other properties as well. Cindy is supposed to pay damages for the loss that befalls Roger as a result of Cindy’s defective work. However there is the presence of a limitation of liability clause that states that the liability for defective workmanship to being limited to a refund of only the price involved.9 The liability of Cindy in this case will therefore be limited to the price involved which for this contract is the 75 that Cindy is expected to receive on attaching the new sign. The general advice therefore to Roger is that he should hold Cindy liable to paying back the invoiced amount of 75 for defective workmanship in the performance of her duty of attaching the sign and not for the other damages suffered. This is as a result of the clause limiting Cindy’s liability. Concerning the television set from Teleland Inc, Roger should only agree to paying the amount attributable to the actual cost of repairing the television set and should not agree to paying any other amount since he is limited to this by a liability limitation clause which is valid under the contract despite its being written at the back of the receipt.10 Conclusion The two situations involved two binding and enforceable contracts where one was for hiring of a television set and the second one concerning attaching a sign by a carpenter. Both contracts are legally binding since they are viewed to have observed the legal principles of binding contracts. The terms and conditions for the two contracts are as well impliedly and explicitly defined thus still making it binding. However despite that the materiality damages in both contracts, there is a limit to their claim in both cases. This is due to the existence of limiting clauses that limits the liability of the party that causes the damages.11 In the contract between Roger and Teleland Inc concerning the television set, the clause is that the company’s liability for defective products is limited to only the cost of repair while in the contract between Rogers and Cindy the liability for defective workmanship is limited to a refund of the price involved. The advice given to Rogers therefore is depended on these limitations to the liability for both cases. . Bibliography Bar, C. and Drobnig, U. (2004). The interaction of contract law and tort and property Law in Europe: A comparative study. (München: Sellier European Law Publ). Blond N. C. Petrillo L. Carstanjen W. and Lee C. (2007) Contracts (New York NY: Aspen Publishers) Blum, B. A. (2007), Contracts: Examples & explanations (Austin: Wolters Kluwer Law & Business) Bonell M. J. (2005), An International Restatement of Contract Law: The UNIDROIT Principles of International Commercial Contracts (Leiden: BRILL) Briefs Casenote Legal. (2008). Contracts: Murphy Speidel & Ayres. (Aspen Law & Business). Cane, P. (1997). The anatomy of tort law. (Oxford: Hart Publ). Emanuel S. (2010), Emanuel Law Outlines: Contracts (New York: Aspen) Friedman J. W. (2009), Contracts (New York: Aspen Publishers) Furmston, M. P. Tolhurst G. & Mik, E. (2010), Contract formation: Law and practice. (Oxford: Oxford University Press) Harlow, C. (2005). Understanding tort law. (London: Sweet & Maxwell). Kurer, M., International Bar Association, Seminar on Warranties and Disclaimers, Annual conference of the International Bar Association, & Seminar on Warranties and Disclaimers. (2002). Warranties and disclaimers: Limitation of liability in consumer-related transactions ; [Seminar on Warranties and Disclaimers held within the framework of the 2000 annual conference of the International Bar Association in Amsterdam]. London [u.a.: Kluwer Law International. Research Group on the Existing EC Private Law (2007), Contract I: Pre-contractual obligations conclusion of contract, unfair terms (München: Sellier European Law Publishers) Read More