Elements necessary to form a valid contract
In your own words, list and explain the elements necessary to form a valid contract.
A valid contract necessitates two major components: First, an agreement between the concerned parties must be established (after an proposal has been made by one party and accepted by the other party); and second, a “consideration “or an exchange of something with a value like cash, goods or service for something else with worth (or a agreement to exchange similar items).
There are situations wherein a contract covers more delicate matters like sale of land and other high-valued items, and job orders that can’t be completed in one year. Thus, another important element in contracts is that it has to be made in writing. More and more states and countries require transactions have to be made in writing in order to avoid confusion. Oral agreements can be very complicated or impractical to prove.
In addition, all contracts that have to be made should be checked with state requirements. Some states do not require some contracts to be made in writing, but other states require most of its contracts in written form.
- In your own words, describe and distinguish among valid, void, voidable, and unenforceable contracts.
A valid contract that meets all the necessary essentials to institute a contract can be put into effect through the labors of at least one party. On the other hand, a void contract has no legal effect, or declared as null. Voidable contracts are those contracts where single or both parties have the selection to keep away from their contractual obligations. Both sides are freed from their contractual obligations in case an agreement is prevented. Lastly, unenforceable contracts are transactions that are considered valid, but the court will not put into effect. It is also known as contracts which there are no legal remedies.
For example, an agreement was made 15 years ago in which one party was able to perform one service for the other party, completed 13 years ago. However, the other party did not compensate the performing party, and no act was taken in the next 13 years.
In the example above, we can say that the contract made is considered valid. However, the party that was not compensated cannot get paid now, for the reason that the Statute of Limitations limits the maximum period of time that legal proceedings based on those actions may be started. The contract is now considered to be unenforceable.
A void contract on the other hand cannot be imposed by law. Examples of void contracts are between drug dealers and buyers. The stipulations of the contract are basically illegal, and neither of the two parties can go to the court to put into effect the contract. Voidable contracts, in relation to void contracts, may be nullified but not automatically will be.
- In your own words, discuss the process of agreement in a contract. (Including but not limited to offer, revocation of offer, acceptance, counteroffer, rejection, etc).
The process of agreement in a contract starts with the proposition of an offer. An offer is the manifestation of willingness to bond on certain terms, with the main intention that the agreement shall be binding as soon as the recipient (the “offeree”) of the offer agrees to the terms of the offeror. The agreement mentioned in the definition may take various forms, like letters, newspapers, fax and email. When the recipient of the offer performs his side of the agreement, the contract is also called a unilateral contract. This should be distinguished with bilateral contracts, where both sides exchange promises.
When some complications arise, the offer may be revoked sooner than it has been accepted, however, the revocation must be publicized to the offered, but there are some cases where the offeror is not obliged to do so.
The final stage of the process of agreement in a contract is acceptance, defined as the final and definite expression of agreement to the terms of an offer. The most common way of showing acceptance is the signing of contracts. In addition, the essential requirement to show agreement is the presence of evidence manifesting their approval. Communication of acceptance is among the rules of acknowledgment in a contract.
The offer will be rejected or the offer becomes invalid due to the death of the offeror or the offeree. And in case, the offeree rejects the offer, the offer that has been abandoned cannot be accepted in the future times. The counter offer revokes or takes the place of the initial offer.
- In your own words, discuss all aspects of consideration (Including but not limited to nominal, adequate, inadequate, illegal etc.)
Consideration is to some extent is something that is completed or guaranteed in return for an agreed undertaking. It includes promises in transactions, as it is required for a contract to be enforceable. Consideration includes the compromise of each party when making an agreement, though doing or nor doing specific acts or by just merely promising to do or not do an act. Consideration may also be illustrated as being an advantage to one party, while being a disadvantage to the other simultaneously.
Two theories that make an effort to describe consideration: (1) “Benefit-Detriment Theory”, wherein it explains that contracts tend to be the benefit of the offeror or to the detriment of the offeree in order to comprise a consideration. The second theory that also explains Consideration is what law experts’ call as the “Bargain Theory”, in which the two or more parties picture the agreement as the consequence on a barter or good deal. In modern contract theory, the latter had replaced the former.
The move from the first theory to the second is to shun inquiries into whether consideration is adequate. A nominal consideration (sometimes called peppercorn) is the term used in some jurisdictions if certain contracts call for small payments just to satisfy minimum requirements for a contracts. In some instances, courts in some jurisdictions may submit to adequate consideration, but in actuality, the court studies whether it had been negotiated for.
In order for a consideration to transpire, an advisory requirement, wherein parties are more likely to study before when making a negotiation. The second is the evidentiary requirement, wherein parties will take note of the promises made during the bargaining process. Lastly the channeling requirement, wherein those contracts are done seriously and that these are not completed in error.
- Define and describe the infancy doctrine, including the N.C. statutory age.
The infancy doctrine is a rule that simply states that the contracts that minors went into are considered voidable. The rule means that a minor, after upon attaining of the age of adulthood, may either decide to ratify or avoid agreed responsibilities he/ she signed before attaining adulthood This law protects children and minors from the harmful effects of their childish and improvident acts.
The ruling defends minors from consequences of their lack of decision-making skills and experience, and in some cases the law provides them the right to dissolve any contract made while still under the juvenile age. While it may cause hardship to those who deal with minors, the right to avoid the minor’s contract is bestowed by law upon a minor against his own carelessness and the intentions of others.
In addition, all states have stated the age which allowed people to sign legal contracts, including marriage. In North Carolina, individuals aged 18 and above can marry without parental consent. Younger individuals should marry with parental consent and in the case of pregnancy. The statutory age in the US is 18; any contracts made by the individual that caused him damage before reaching this age will be nullified (but this is not absolute, in the case of necessaries of life).
- Explain a minor’s obligation to pay for the necessaries of life and a parent’s obligation to provide for a minor.
A minor may not stay away from a contract of goods and services which are necessary for his/ her nourishment. These contracts are considered to be binding, even if these were entered during the age of minority or by a minor.
Acquisitions that comprise foodstuff, medications, garments, protection or private services are considered rationally indispensable for the “safeguarding and pleasure of life”. The minor is allowed to contract for their benefit, or to move away from them when it proves detrimental or damaging to them; they are also completely bound, and may be taken into legal action and charged accordingly.
In short, the influence to secure for their provisions is for their advantage, because the acquisition of these is indispensable to their survival. If the youth were not accepted, they might perish, because of the lack of support. However, parents are still required to provide for their sons/daughters before they reach the age of maturity, after which the individuals are now expected to possess the capacity to provide for themselves.
- In your own words discuss capacity ( Including but not limited to adjudged insanity, intoxication, legal insanity)
Capacity shows their ability to make binding alterations to their rights, duties and obligations. Examples include getting married or entering into contracts, creating gifts and writing a bona fide will. When the law restricts a person from engaging in particular activities, any contract or arrangements to do so is deemed voidable or void for incapacity, we call this legal incapacity as incompetence.
Capacity may be hindered by several factors as stipulated by law. These are persons whom have their freedom restricted from engaging in contracts. These restrictions justified exclusion from the freedom of contract and some specific human and civil rights. These include insanity or the possession or a mental illness or specific medical conditions. These hinder individuals from accomplishing normal levels of accomplishment expected from persons of comparable age.
Intoxication or the consumption of intoxicants or drugs may render the individual the same case as that of insanity. Intoxication reduces the ability pr these persons to comprehend what they are doing, and the law does not grant them special privileges to take any actions while in the state of incapacity.
- What is meant by the term ratification in regards to contracts and capacity/legality?
Ratification is an expression or an act wherein a person who is in the age of majority points out an intention to be guaranteed by a contract made by a minor.
Any contract that an intoxicated person is considered as voidable, at the choice of the intoxicated person, even if the intoxication is said to be intentional. Intoxicated individuals are required by courts to send back any consideration received, except in the case of necessities. In addition, an intoxicated person may confirm a voidable contract after becoming able to think. Implied ratification occurs when an individual is unsuccessful to disaffirm an agreement within an acceptable length of time after recovery.
- What relevance does public policy and statutes have on contracts?
Public policy seeks to protect the right of individuals, especially those who have little or no capacity to engage in contracts. Public policy sets forth guidelines on which individuals can forge contracts on their own, at the age where they are capable of thinking for their own welfare. The statutory age shows the permissible age level at which the individual can engage into contracts and not damage himself/herself afterwards.
In addition, the offered of contracts is also forearmed to be cautious of any contract that has to be made since the age of minority reserves some right, especially when it comes to their necessities. Contracts are needed to be valid—just plainly basing on the three major elements of written agreements, consideration and agreement does not necessarily translate to a totally valid contracts.
- Define and describe intentional misrepresentation (fraud), including in your answer the following: fraud in the inception, fraud in the inducement, and fraud by concealment (or silence).
Intentional misrepresentation or fraud exists when a person intentionally makes a false statement with the expectations and intentions that will cause harm to the offeree. Intentional misrepresentation can take the case of intentionally made bogus promise to perform something in the future with no intention of doing it on the time the promise was made. It also includes concealment of facts.
Fraud in the inception includes deceiving persons (especially illiterate persons) to sign contracts, thinking it was something else. Fraud in the inducement on the other hand, deliberately causes a person to implement or make a false judgment, aka, misleading someone about the right facts. Fraud by concealment involves partial disclosure of truth, or the usage of words that hide the truth about a product or service. The use of trickery is also involved here. Some necessary information is also reserved as confidential.
- Compare and contrast intentional misrepresentation with innocent misrepresentation
Intentional misrepresentation corresponds to a person deliberately making false statements where individuals rely upon as being true. For example, someone promises to perform a certain job for somebody in the future, but has no real intention of doing it. Intentional concealment of facts is also included, and these may cause harm to a person. In addition, innocent misrepresentation, are of a less extent than intentional misrepresentations, as those individuals that committed these could have failed to their duty to disclose to their customers some important information. Individuals who are victims of these types of misrepresentation are entitled for compensation. (AMMIRATO & PALUMBO, 2007)
AMMIRATO & PALUMBO, L. (2007). Misrepresentation [Electronic Version]. Retrieved June 5, 2007 from http://www.ammiratopalumbo.com/LibraryConsumerClaims.html.