Requirement and Contents of a Contract - Case Study Example

 Contents Contents 1 Business Management Affairs 2 Background 2 Requirements of a valid and binding contract 2 Terms and contents of a valid contract 7 Breach of contract 9 Remedies available for a breach of contract 10 Conclusion 12 Works Cited 13 Business Management Affairs This paper argues regarding the contents and requirements of a contract along with the remedies available due to a breach of contract. Background Simon wants have as a feature a guest appearance by a glamorous and high profile celebrity in order to boost the screening figures and to acknowledge the insight of business and global appeal on his reality TV show “You’re Hired!” He decides that Lady Gaga would be an ideal choice supported by the prestige and marketing of herself as an immensely flourishing acting and recording performer globally. The content and requirements that he needs to incorporate in the contract with Lady Gaga in order to constitute it as a valid and genuine contract are described below along with any remedies that will be available to him as a result of the breach of contract by Lady Gaga. Requirements of a valid and binding contract The reason of having a contract is to evidently sketch an agreement so the "objective" is achieved while putting an end to any disagreement or litigation. There are some requirements that should be assessed before the contract arrangement is carried out and Simon should make sure that all the requirements of the contract are present and are met before the making of the contract with Lady Gaga. The requirements of a valid and binding contract are: Parties Offer and acceptance Capacity to contract Lawful Object Free Consent Consideration Parties: Parties to the contract are those between which the contract takes place and those who have reached an agreement in which on is eager to give the performance of the contract and the other is eager to receive the performance. The contract should recognize who are the parties between whom the contract is taking place; generally the names of the parties are adequate but at times their designations or addresses may also be used. In this contract, the parties are Simon and Lady Gaga between whom the contract is taking place and they can be named as the parties to a contract. Offer and acceptance: For a contract to be carried out there is an important requirement that a valid offer has to be made by the person who requires to enter in to a contract but the offer does not create an obligation on the person to whom the offer is made that he accepts that offer. The offer has got to be unambiguous and specific. It must also be evidently communicated to the person with whom the contract has to be carried out. An invitation to treat or a mere statement on behalf of the person making the offer can be made which may emerge as an offer, but in fact it is not a valid and legal one. Offers made in enthusiasm, Communal invitations or offers that are made in prank or hoax can not be considered as valid and binding offers. For example, usually a communal invitation does not carry any intention of getting in to a conract. In a nut shell, a promise made by the offeror to the offeree, in which he requests the performance or the restraint from any action or performance from the offeree which he has the right of is a valid offer. As for the acceptance, the acceptance must be willingly made by the offree i.e. Lady Gaga and should be communicated to the offerror in which all the terms and contents should be affirmed as they are or after amendments that are mutually agreed by both the parties. Capacity to contract: This is another important requirement for the contract to be held and to be called a valid and binding contract as it is very important that the parties that are entering in to an arrangement have the capability as well as the competence to enter in to a contract. The capability to be familiar with and recognize the stipulations of contract is called as the capacity of the parties to enter in to a contract. In order for an agreement to be legitimate, all the components be required to have capacity to contract. Usually adults and companies possess the capacity to enter in to a contract but minors, mentally affected individuals and individuals who are under the influence of drugs do not possess the capacity to enter in to a contractual agreement. Most conditions believe people below the age of 18 as minors which in the case of lady Gaga will not be an issue for Simon. Legal Objective: It is another of the most important constituents of a valid and binding contract as the parties must have an objective that comes within the context of the law to base their contract on. For a contract to be legal, the objective and purpose of the contract should also be lawful. If the objective is unlawful due to the common law’s statue, the contract may also be deemed null and void. If the arrangement or the objective of a contract is illegitimate or unlawful that results in an offence or tort, or is opposed to the public interest, the contract is usually considered to be void right from the beginning. For example, a contract involving purchase of stolen articles or drugs, or engages in deception or injury to somebody or somebody’s image will be deemed to be void. Free Consent: A legitimate and binding contract also needs the consent of the parties that should be given freely, mutually and should be communicated to one another. Consent cannot be said to be free when it is acquired through coercion or pressure, under threat, by undue influence, through fraud, or by fault. (Steinberger 2007) Books have been printed regarding the complications of these factors. Visibly, An individual who agrees to a contract because he has been severely pressurised to do so or has been mislead, doesn’t mean that he has given his consent to the agreement and therefore he has an option to withdraw it. Mostly the cases are not that precise, and the application of the law is necessary for each individual case. Furthermore, the consent can’t be deemed to be common except the parties be in agreement on the same object and in the same logic. Frequently, it is regarded as the "meeting of the minds." When both the parties cover a "meeting of the minds," it can be said that an agreement has been made between the two mutually. The parties should recognize the agreement, having made sure that no confusion, misunderstanding or mistake is present between them. Consideration: A Consideration is something that carries a worth which is traded among the parties according to agreement of the parties in order to act upon under the provisions of their contract. Every contract needs a consideration to be based upon, which means that each party should achieve something. It can be something which is or isn't performed or provided. When a party consents to do something or to refrain from doing something, he/she must gain something in return. (Nogara 2010) Consideration can be in the form of money or can be in the form of exchange of an additional undertaking to do something. In a contract of business, the compensation of price may represent to be the consideration of the contract. In absence of a consideration, a valid contract cannot exist. In this case, the consideration can be the price that will be paid to Lady Gaga for her contribution on the TV show. Terms and contents of a valid contract An agreement commonly comprises of a variety of terms. Yet the simplest type of agreement or contract will include the terms on which the contract is based upon. The terms of a contract can be implied or express. Some of the terms and contents that are required to be included are explained in detail below. (Pierobon) Parties identity Agreement’s duration and limit The performance that has to be given during the show Consideration in form of price which has to be paid The terms and condition of the payment Terms and conditions of the service Party’s identity: It obvious, that the identities of the employer and the employee must be incorporated in the contract of employment or service. The identities of the parties such as their names, their addresses and their other whereabouts are very necessary for identification purposes to avoid any other issues in the further dealings. Agreement’s duration and limit The date and duration on which the performance is expected must be clearly mentioned in the contract with the specific details and the date beginning from where the contract becomes executive. It is mandatory that the contract mentions all the specific extracts about the timing and occurrence of the show such that later, no dispute may arise between the two. The performance that has to be given during the show: The description of the performance that Lady Gaga has to give and the knowhow of the show as to what is expected from her also need to be included in the contract. (Harms 2008) This is the most important part of the agreement which forms the basis of the contract and it is essential that it is thoroughly mentioned regarding what is the essence of presence of Lady Gaga so that the celcebrity prepares for the show accordingly and during the show there is no misconception of dispute. Consideration in form of price which has to be paid: The form and amount of consideration must be explicitly incorporated in the agreement to prevent any dispute. The price should be settled in the very start as to what the price will include and whether the conveyance and other related expenses will also be included or not must be properly incorporated in the agreement. The terms and condition of the payment: The mode of payment and the terms of discharge also need to be thoroughly incorporated in the agreement so that both Simon and Lady Gaga are sure as to when the payment has to be made. The mode and timing of the payment are very essential if the payment is to be made on the spot or is to be deferred. Terms and conditions of the service: The additional terms and conditions which may include the operation of the contract and any actions due to a breach should also be incorporated to prevent any dispute. This will give the final touches to the agreement and it is always beneficial for both the parties to a contract to have known and understood the consequences of the breaches so that they both avoid it in the future. Breach of contract When one of the parties fails to carry out his assured responsibility under a contract, the party has said to carry out a breach of the contract. In other words, if the party fails to fulfil his part of the promise, or has communicated to the other person that he will refrain from performance of his obligation under the or his actions and behaviour seems to give an indication that he will be unable to give the performance, he has said to carried out a breach. There are basically two major types of breach of contracts: Anticipatory breach of contract Actual or material breach of contract An optimistic and unambiguous announcement or act by the party representing that he does not intend or propose to go on with the contract or will not be able to deliver the performance at the decided time before the arrival of the time when the obligation under the contract is due is known as the anticipatory breach of the contract. (Wiley 2010) Other breach can be in the form that the party delivers a defective performance, does not perform at the time of the contract with any intimation or in this case the party does not appear at the time of the contract, which is referred to as actual or material breach. Remedies available for a breach of contract The injured or affected party possess quite a few rights in order to tackle the breach of contract without having to consult the court of law and to resolve the matter through mutual agreement and understanding. Some of which are explained in detail below. He may rescind the contract or discharge the party in default from future obligations of performance fixed in their contract. In addition, they might concur on Novation. Rescission of the contract: Rescission can be referred as the undoing of a contract. In other words, it is carried out to bring the parties to the point where they stood before they had entered in the contract and it discharges both the parties from their obligations under the contract and nullifies the contract. (Legal Dictionary 2010) Novation: A novation takes place when another person takes up the responsibility perform the part of the contract that was due by another party to the contract. In a novation, the original party to the contract is discnarged from his obligation under the conract and now the performance will be due from the other party. The kind of deal depends on the conformity among the parties. (Legal Dictionary n.d.) Apart from this, the remedy available to Simon is that he can take legal action against Lady Gaga for monetary damages or for the specific performance of the contract. Sue for Damages: When a party sues for the loss of profits for non performance or for the fee of the court, it is considered that the party has sued for monetary damages. Simon may recover the damages for the foregone profits and the expense that he had to bear for the default of performance of Lady Gaga in the show. Suit for specific performance: A suit for specific performance can be filed and the court may order the exact and same performance under the contract if the court believes that monetary damages will not be able to compensate the injured party. When the remedy of specific performance is sought, the party actually asks the court for the impartial remedy and a forceful performance under the actual contract. However, there is little possibility that the courrt grants an order of specific performane because of the differences that would have developed among the parties after the dispute. (Contract Law n.d.) Conclusion Before Simon actually gets in to a contract with Lady Gaga, he has to make sure that he has considered all the basic requirements of the contract and has added all the contents of a contract without leaving and loopholes in the arrangement which may later cause him any disturbance. However, if Lady Gaga breaches the contract or does not give the actual performance under the contract that is due from her, he has several remedies available to him which may bring comfort to Simon and can recover the loss that he has sustained. Works Cited “Contract Law.” Harms, Leann. “Typical Contents of a Contract of Employment.” E-how, 2008. Legal Dictionary. 2010. http://legal-dictionary.thefreedictionary.com/Rescission+of+contract (accessed May 7, 2011). Legal Dictionary. http://legal-dictionary.thefreedictionary.com/novation (accessed May 7, 2011). Nogara, J.S. “Requirements for a Legal Contract.” E-how, 2010. Pierobon. http://www.pierobon.org/export/ch10/content.htm (accessed May 5, 2011). Steinberger, Jeffrey. “Is This Contract Valid?” Entrepreneur, 2007. Wiley, John. Breach of contract Law. New Jersey: Wiley Publishing, 2010. Read More