Elements of a Valid Contract
American Intercontinental University
BUSN310-10 Unit 3 Individual Project
Deanna K. Wadley
October 23, 2011
ABTRACT
This paper will attempt to identify and explain the four elements of a valid contract, explain what the objective theory of contracts is and define and explain how the objective theory of contracts applies to the Unit 3 IP. This paper will also explain why I think the court held that there was not a valid contract in the scenario of the unit 3 IP as well as explain why advertisements are generally considered not to be valid offers.
The four elements of a valid contract are: * There must be an agreement in all vital conditions of the contract. * There must be a notion of consideration which means each party of the contract will have established their obligations to the other party. * There must be a capacity or competence which will ensure that each party of the contract is legally and lawfully capable of agreeing to and fulfilling the contract. * A legal purpose of the contract has to be established (Goldchild, Herring & Milosevic, 2000).
The objective theory of contracts is used as an approach to determine contractual intent which states that a party’s intent is deemed to be what a reasonable person in the position of the other party would think (Intent, n.d.). In deciding for example; whether party A intended to make an offer to party B, the issue is whether party A’s conduct reasonably indicated to party B that party A is in fact making an offer and whether part B reasonably believed that party A was serious.
The objective theory of contracts applies to the Unit 3 scenario in that party A, the soft drink company, intent was deemed by the judge to be made in jest and that party B, the man from Seattle could not have reasonably believed the offer.
The court held that there was not a valid agreement due to the fact that no reasonable person could have believed that the commercial by the soft drink company actually
BUSN310-10 Unit 3 Individual Project
Deanna K. Wadley
October 23, 2011
ABTRACT
This paper will attempt to identify and explain the four elements of a valid contract, explain what the objective theory of contracts is and define and explain how the objective theory of contracts applies to the Unit 3 IP. This paper will also explain why I think the court held that there was not a valid contract in the scenario of the unit 3 IP as well as explain why advertisements are generally considered not to be valid offers.
The four elements of a valid contract are: * There must be an agreement in all vital conditions of the contract. * There must be a notion of consideration which means each party of the contract will have established their obligations to the other party. * There must be a capacity or competence which will ensure that each party of the contract is legally and lawfully capable of agreeing to and fulfilling the contract. * A legal purpose of the contract has to be established (Goldchild, Herring & Milosevic, 2000).
The objective theory of contracts is used as an approach to determine contractual intent which states that a party’s intent is deemed to be what a reasonable person in the position of the other party would think (Intent, n.d.). In deciding for example; whether party A intended to make an offer to party B, the issue is whether party A’s conduct reasonably indicated to party B that party A is in fact making an offer and whether part B reasonably believed that party A was serious.
The objective theory of contracts applies to the Unit 3 scenario in that party A, the soft drink company, intent was deemed by the judge to be made in jest and that party B, the man from Seattle could not have reasonably believed the offer.
The court held that there was not a valid agreement due to the fact that no reasonable person could have believed that the commercial by the soft drink company actually
References: Goldchild, A., herring, C. and Milosevic. Z. (2000). Business Contracts for B2B. Retrieved October 23, 2011 from. http://logic.stanford.edu/classes/cs204/readings/goldchild2000.pdf. How Are Advertisements Used In Business Law. (2011). Retrieved October 23, 2011 from. http://business.laws.com/business-ethics/advertisements. Intent to Contract. (n.d.). Retrieved October 23, 2011 from. http://home.pon.net/jmt/ law/onel/contract/emancon1.html.