Aspects of Contract and Negligence for Business - Assignment Example

A contract is an agreement between two parties. A valid contract should have some basic elements. These elements are offer, acceptance, intention to create legal relations and consideration. If any of these elements is missing, the agreement cannot be treated as a valid contract. The first element of a valid contract is an offer, which is an expression of the willingness of a party to enter into a contract and intends to be bound if the offer is accepted. The offer should include terms, which are certain and be communicated to the offeree (Bayern, n.d.). An offer should be distinguished from an invitation to treat. An invitation to treat is a declaration to enter into negotiations and cannot be accepted in the formation of a contract.

They form part of preliminary negotiations and cannot be deemed an offer. The court in Harvey v Facey (1839) held that an invitation to treat is an indication by the owner that they are interested in selling an item. An offer remains open until the specified time expires or is accepted. Where there is no time limit, it is deemed to have expired after a reasonable time has passed. Death or insanity of either party terminates an offer. It can also cease to exist if it is expressly or by conduct demonstrated that it no longer exists.

If an offer is made to the general public, it can only be terminated by communicating through the same channel the offer was made. An offer can be rejected by the offeror or with a counteroffer (Bix, 2012). In Hyde v Wrench (1840), the court held that a counteroffer kills the original offer and the initial offer cannot be accepted at a future time. In Smith v Hughes (1871), the court pointed out that in determining whether there is a valid offer, the parties’ intentions are not important but rather how a reasonable person would consider the situation.

The second element of a valid contract is acceptance, which is an expression of agreeing to the terms of the offer. An acceptance can only be valid if the party agreeing to it is aware of the existence of an offer. It must also be unconditional, clear and mirror the terms of the offer.