Assignment 1 Common Law
This assignment is based on a case study of business law.. and gives a brief description on different types of contracts...
Common Law Assignment 1
CASE STUDY “BUSINESS AGREEMENT” Q1. In relation to the above scenario discuss the nature of Ali’s advertisement with regards to rules of offer and invitation to treat. Ans) Offer and acceptance analysis is a traditional approach in contract law used to determine whether an agreement exists between two parties. As a contract is an agreement, an offer is an indication by one person (the "offerer") to another (the "offeree") of the offeror's willingness to enter into a contract on certain terms without further negotiations. A contract is said to come into existence when acceptance of an offer (agreement to the terms in it) has been communicated to the offerer by the offeree. The offer and acceptance formula, developed in the 19th century, identifies a moment of formation when the parties are of one mind. This classical approach to contract formation has been weakened by developments in the law of estoppel, misleading conduct, misrepresentation and unjust enrichment The "mirror image rule" states that if you are to accept an offer, you must accept an offer exactly, without modifications; if you change the offer in any way, this is a counter-offer that kills the original offer. However, a mere request for information is not a counter-offer. It may be possible to draft an enquiry such that it adds to the terms of the contract while keeping the original offer alive. Unilateral contract The contract in Carlill v. Carbolic Smoke Ball Co was of a kind known as a unilateral contract, one in which the offeree accepts the offer by performing his or her side of the bargain. It can be contrasted with a bilateral contract, where there is an exchange of promises between two parties. In Australian Woollen Mills Pty Ltd v. The Commonwealth (1954), the High Court of Australia held that, for a unilateral contract to arise, the promise must be made "in return for" the doing of the act. The court distinguished between a unilateral contract and a conditional gift. The case is generally seen to demonstrate the connection between the requirements of offer and acceptance, consideration and intention to create legal relations. Bilateral Contract A bilateral contract is distinguishable from a unilateral contract, a promise made by one party in exchange for the performance of some act by the other party. The party to a unilateral contract whose performance is sought is not obligated to act, but if he or she does, the party that made the promise is bound to comply with the terms of the
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agreement. In a bilateral contract both parties are bound by their exchange of promises. Postal acceptance rule As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that the acceptance was posted (Adams v. Lindsell (1818) 106 ER 250). This rule only applies when, impliedly or explicitly, the parties have in contemplation post as a means of acceptance. It excludes contracts involving land, letters incorrectly addressed and instantaneous modes of communication. Invitations to treat An invitation to treat is not an offer, but an indication of a person's willingness to negotiate a contract. In Harvey v. Facey, an indication by the owner of property that he or she might be interested in selling at a certain price, for example, has been regarded as an invitation to treat. Similarly in Gibson v Manchester City Council the words "may be prepared to sell" were held to be a notification of price and therefore not a distinct offer. The courts have tended to take a consistent approach to the identification of invitations to treat, as compared with offer and acceptance, in common transactions. The display of goods for sale, whether in a shop window or on the shelves of a self-service store, is ordinarily treated as an invitation to treat (Fisher v. Bell) and not an offer. The holding of a public auction will also usually be regarded as an invitation to treat.
Now in relation with the case the nature of Ali’s advertisement is not an invitation to treat but a serious offer as mentioned in his advertisement. Ali runs a business selling computers which is his commercial business and places an advertisement in the newspaper which sates- ‘Once in a lifetime opportunity: a Bell Supreme; pounds 500 cash. This is a serious offer – the Bell Supreme will go to the first person who accepts it on Saturday – valid for one day only’. The Advertisement clearly states that it is a serious offer and whoever accepts the offer first in morning gets the Bell Supreme. The advertisement abides all the terms and condition of an offer. Thus it cannot be taken as an invitation to treat. We shall now see Ali’s deals with different parties: In case of Bob When Bob saw this advert in the newspaper he immediately posted a letter of acceptance. But according to Ali’s advert postal rules does not apply in the advertisement and hence the conditions of the advertisement are not met. Thus there is no agreement between them.
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In case of Cindy As per the advertisement Cindy was the first person to be there on Saturday morning but she offered Ali a cheque whereas his Advertisement clearly stated that he wanted to sell the Bell Supreme for 500 cash. Thus he rejected the offer from her. Hence so far Ali has no legal agreements with anyone. In case of Den Later during the day Den comes in and offers Ali a counter offer to keep the offer open until Monday. Ali accepts the offer and as a gesture of his intent Den offers Ali pounds 50 which legally now makes Den the owner of the Bell Supreme. Ali hence now has a legal agreement with Den as money as well has been exchanged between them. In case of Eva Later when Eva offered to pay Ali pound 600 cash; Ali as well accepted her offer and decided to sell the computer to her. Thus now there is a legal agreement between Ali and Eva as well. Therefore Ali now has legal agreement with two parties; Den and Eva.
Q2. According to the rules of acceptance, signify when the agreement has been constituted and who are the parties in agreement if any (offerer and accepter). Ans) Acceptance is a final and unqualified expression of assent to the terms of an offer. It is no defense to an action based on a contract for the defendant to claim that he never intended to be bound by the agreement if under all the circumstances it is shown at trial that his conduct was such that it communicated to the other party or parties that the defendant had in fact agreed. Signing of a contract is one way a party may show his assent. Alternatively, an offer consisting of a promise to pay someone if the latter performs certain acts which the latter would not otherwise do (such as paint a house) may be accepted by the requested conduct instead of a promise to do the act. The performance of the requested act indicates objectively the party's assent to the terms of the offer. Communication of acceptance There are several rules dealing with the communication of acceptance:
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• • • • •
The acceptance must be communicated: Depending on the construction of the contract, the acceptance may not have to come until the notification of the performance of the conditions in the offer as in Carlill's case, but nonetheless the acceptance must be communicated. Prior to acceptance, an offer may be withdrawn. An offer can only be accepted by the offeree, that is, the person to whom the offer is made. An offeree is not bound if another person accepts the offer on his behalf without his authorization. It may be implied from the construction of the contract that the offerer has dispensed with the requirement of communication of acceptance. If the offer specifies a method of acceptance (such as by post or fax), you must accept it using a method that is no less effective than the method specified. Silence cannot be construed as acceptance
Now in Regards with the rule of acceptance to Ali’s advertisement: Den and Eva were the two parties with whom Ali has a legal agreement of acceptance. Den offers Ali a counter offer and Ali accepts it. So in Den’s case Den is the offerer and Ali is the acceptor. As promised and agreed by both the parties; Den pays an advance of pound 50 and Ali accepts it agreeing to keep the offer going till Monday morning. Even is Eva’s Case Eva is the Offerer and Ali is the acceptor. This is because Eva offers Ali pound 600 cash and he accepts her offer. Therefore there is a legal acceptance between them. Q3. What is the implication of rules of consideration and intention with regards to Ali’s conduct with all the parties? Ans) Consideration is one of the three main building blocks of a contract in English contract law. Consideration can be anything of value (such as an item or service), which each party to a legally-binding contract must agree to exchange if the contract is to be valid. If only one party offers consideration, the agreement is not legally a binding contract. In its traditional form, consideration is expressed as the requirement that in order for parties to be able to enforce a promise, they must have given something for it. Something must be given or promised in exchange or return for the promise. A contract must be "met with" or "supported by" consideration to be enforceable; also, only a person who has provided consideration can enforce a contract. In other words, if an arrangement consists of a promise which is not supported by consideration, then the arrangement is not a legally enforceable contract. Mutual promises constitute consideration for each other. ("I promise you to do X, in consideration for which promise you promise me to do Y").
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Consideration for a particular promise exists where some right, interest, profit or benefit accrues (or will accrue) to the promisor as a direct result of some forbearance, detriment, loss or responsibility that has been given, suffered or undertaken by the promisee. The consideration must be executory or executed, but not past. Consideration is executory when a promise to do something in the future is given in exchange for another promise to be done in the future. Consideration is executed when a promise is actually executed, in exchange for another promise to be executed in the future. Consideration is past when a promise has been given or executed before and independently of the other promise. For example, I promised to take you to lunch, and then when we got there I said "you must pay, because I have given you the benefit of my company" This is past consideration and therefore NO consideration. RULES OF CONSIDERATION: • CONSIDERATION MUST NOT BE PAST If one party voluntarily performs an act, and the other party then makes a promise, the consideration for the promise is said to be in the past. The rule is that past consideration is no consideration, so it is not valid and cannot be used to sue on a contract. For example, A gives B a lift home in his car. On arrival B promises to give A £5 towards the petrol. A cannot enforce this promise as his consideration, giving B a lift, is past. • CONSIDERATION MUST BE SUFFICIENT BUT NEED NOT BE ADEQUATE Providing consideration has some value, the courts will not investigate its adequacy. Where consideration is recognized by the law as having some value, it is described as "real" or "sufficient" consideration. The courts will not investigate contracts to see if the parties have got equal value. For consideration to be good consideration, it must be of some value, even if it is minimal value. There is no requirement that the consideration be commensurate in economic terms to the original promise. Nominal consideration will suffice as good consideration for a contract; Courts will not measure the adequacy of the consideration as it is up to the parties to decide the subjective worth of each promise. Thus consideration can come in any forms, a hawk, a horse or a robe. Even a peppercorn would be sufficient.
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• CONSIDERATION MUST MOVE FROM THE PROMISEE The person who wishes to enforce the contract must show that they provided consideration; it is not enough to show that someone else provided consideration. The promisee must show that consideration "moved from" (i.e. was provided by) him. The consideration does not have to move to the promisor. If there are three parties involved, problems may arise. • FOREBEARANCE TO SUE If one person has a valid claim against another (in contract or tort) but promises to forbear from enforcing it, that will constitute valid consideration if made in return for a promise by the other to settle the claim. • EXISTING PUBLIC DUTY If someone is under a public duty to do a particular task, then agreeing to do that task is not sufficient consideration for a contract. If someone exceeds their public duty, then this may be valid consideration. • EXISTING CONTRACTUAL DUTY If someone promises to do something they are already bound to do under a contract that is not valid consideration. The principle set out in Stilk v Myrick was amended by the following case. Now, if the performance of an existing contractual duty confers a practical benefit on the other party this can constitute valid consideration. • EXISTING CONTRACTUAL DUTY OWED TO A THIRD PARTY If a party promises to do something for a second party, but is already bound by a contract to do this for a third party, this is good consideration. In regards with Ali’s advertisement; both parties are under executory consideration. The advertisement clearly shows that Ali had the intentions of creating a legal contract and was not doing anything for social means. The intention of the advertisement was and is valid as Ali was in the business of selling computers. According to the situations mentioned above; the only people Ali had legal agreements are with Den and Eva.
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Den – As agreed by both the parties Den comes in on Monday morning and asks Ali to give him the Bell Supreme for which he had paid advance. But Ali refuses to give the computer to him and then Den is forced to buy a computer from some other shop for pound 800 which was pound 300 more than Ali’s offer. Now in this case Den can sue Ali and demand for the difference he had to pay; as he had already paid him pounds 50 as an offer of acceptance and had accepted to buy the computer before Eva offered to buy it. Only if Den had come late according to the promise made by him then the agreement could be dissolved by Ali. Eva – Eva as well wanted to buy the Bell Supreme and hence offered pound 100 more for the computer. Ali’s intention was to gain pound 100 more and so he accepted her offer and gave her an extension to pay until Monday afternoon. But then later on Monday afternoon Eva called Ali and refused to buy the Bell Supreme. Now in this case Ali can sue Eva because due to her offer he did not sell the computer to Den. And in the end could never sell the computer to either of them. But Ali could sue Eva if Den does not come into picture. If he comes then Ali is the one who will be in trouble because legally the Bell Supreme no more belonged to him and it belonged to Den as he had paid pound 50 to Ali as a sign of commitment of buying it on Monday morning. Q4. Describe the rules regarding capacity of the parties? Ans) Capacity of Parties The legal ability of people or organizations to enter into a valid contract is known as Capacity of the parties. Person entering into a contract will have full, limited, or no capacity to contract. Full capacity to contract: The unlimited ability of a person to enter into a contract that is legally binding. Most adults, including those who are illiterate, have full capacity to contract and are said to be competent parties. Limited capacity to contract: The ability of a person to enter into a contract that is legally binding upon himself or herself only under certain circumstances. For example, minors have limited ability to contract, which means that the contract of a minor is valid only if the minor does not disaffirm a contract entered into during his or her minority or shortly after reaching
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majority. Contracts made by minors to obtain such necessities as food, clothing, and shelter, however, are not voidable by the minor and will be enforced against him or her. No capacity to contract: The inability of a person to enter into a valid contract under any circumstances. Such inability can arise when a person has been adjudicated insane or if he or she is an officer of a corporation who is not authorized to execute a contract on behalf of the corporation. Lack of capacity would also cover acts of a corporation beyond the powers as defined in the articles of incorporation. As per this case, there are special laws in regards with minors. But in this case none of the parties are minors nor mentally disordered or drugged hence the rules do not apply on any of these parties and the contract is very much legal.
Q5. Discuss the various types of business agreements and essentials for a Valid Contract. Ans) The various types of business agreements are as follows:Commercial Contracts A commercial contract refers to a legally binding agreement between parties in which they are obligated to do or not do certain things. Contracts may be written or verbal and drawn up in a formal or informal way. Most businesses create contracts in writing to make the terms of agreement clear, often seeking legal counsel when drawing important contracts. Contracts may encompass all aspects of a business, including hiring, wages, employee safety, leases and loans. Consumer Contracts The traditional English approach to contracts has been severely curtailed in the area of consumer contracts due to the influence of the EU. Starting with the Consumer Credit Act 1974 and progressing through the Unfair Terms in Consumer Contracts Regulations 1999, the position in respect of consumer contracts is almost the opposite to commercial contracts. Courts are taking an increasingly consumer protectionist approach and will interfere in almost any contract which has resulted in unfair liability on the consumer. Key areas to watch out for include: •
Consumer Credit. If you are offering any products on credit, it is essential that all consumer credit laws are complied with. Even advertising consumer credit deals in store or online requires compliance with detailed rules.
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Unfair Contract Terms. The regime under the Unfair Terms in Consumer Contract Regulations 1999 is weighted heavily in favor of the consumer. There are detailed guidelines as to what is and is not an unfair term and any unfair terms are deemed void. Special care should be taken when contracts are made on your standard terms of business.
Cooling Off periods. The cooling off period is a concept with which English businesses have to become increasingly familiar. Consumer Credit agreements and agreements affected by the Distance Selling Regulations carry prescribed cooling off periods in most circumstances. This allows the consumer to cancel the contract without incurring any liability for a statutory period – usually 7 days after it is signed.
Jurisdiction. Although a jurisdiction clause is advisable in a commercial contract, it is unlikely that this will help you in a consumer contract. The primary jurisdictional rule is that if you are suing a consumer, you bring the claim to them in the country of their residence. This can be altered by express agreement however in practice such an agreement is unlikely
Construction contracts Formal agreement for construction, alteration, or repair of buildings or structures (bridges, dams, facilities, roads, tanks, etc.). A construction contract is distinct from a contract to assemble, fabricate, or manufacture. Sale and purchase Agreements (SAP) Sale and purchase agreement is a legal contract that obligates a buyer to buy and a seller to sell a product or service. Sale and Purchase Agreement are found in all types of businesses but are most often associated with real estate deals as a way of finalizing the interests of both parties before closing the deal. Sales and purchase agreements are also found in the upper supply chains of many large, publicly-traded companies. They are set up to help both the suppliers and the purchasers forecast demand and costs, and become increasingly important as the size of the deals increases. Conveyancing transactions In law, conveyancing is the transfer of title of property from one person to another, or the granting of an encumbrance such as a mortgage or a lien. The term conveyancing may also be used in the context of the movement of bulk commodities or other products such as water, sewerage, electricity, or gas. A typical conveyancing transaction contains two major landmarks: the exchange of contracts (whereby equitable title passes) and completion (whereby legal title passes).
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Conveyancing occurs in three stages: before contract, before completion and after completion. A buyer of real property must ensure that he or she obtains a good and marketable 'title' to the land; i.e., that the seller is the owner, has the right to sell the property, and there is no factor which would impede a mortgage or re-sale. A system of conveyancing is usually designed to ensure that the buyer secures title to the land together with all the rights that run with the land, and is notified of any restrictions in advance of purchase. In most mature jurisdictions, conveyancing is facilitated by a system of land registration which is designed to encourage reliance on public records and assure purchasers of land that they are taking good title. Agency Agreement An agency agreement is a legal contract creating a fiduciary relationship whereby the first party ("the principal") agrees that the actions of a second party ("the agent") binds the principal to later agreements made by the agent as if the principal had himself personally made the later agreements. The power of the agent to bind the principal is usually legally referred to as authority. Agency created via an agreement may be a form of implied authority, such as when a person gives their credit card to a close relative; the cardholder may be required to pay for purchases made by the relative with their credit card. An example of Agency Agreement: An example of the existence of an agency agreement at issue in a 2006 court case arose when a tennis tournament sponsor sued Venus and Serena Williams for not participating. The sponsor argued that their father, Richard Williams, had committed to their participation in the tournament. The Williams sisters argued that their father did not have the authority to bind them to such an agreement. If their father did commit the sisters to play, the issue for the court to decide is whether a valid agency agreement existed between the Williams sisters and their father. If not, then they likely were not bound to his agreement under the law of agency. ESSENTIALS OF A LEGAL CONTRACT The law of contract is part of the common law. It has not been codified into a written Act of Parliament in any part of Australia so far. It is interesting to note that contract law has, in fact, been codified and enacted as the Contract Act in India. However, the Commonwealth Parliament and each of the State and Territory Parliaments have passed laws modifying the basic common law. Examples of Acts passed are the Commonwealth Trade Practices law and various State Acts such as the Sale of Goods Act, Fair Trading Act and consumer protection Acts.
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A contract is basically an agreement. There are six essentials to the formation of a valid contract. These are: 1. Intention to create legal relations. 2. Offer and acceptance. 3. Consideration. 4. Legal capacity. 5. Consent. 6. Legality of objects. We shall take a brief look at each of these. Intention to create legal relations There can be no contract unless the parties intend to create legal relations. Domestic arrangements, such as who will do the washing- up etc, are excluded because the parties have no intention of creating legal relations. Offer and acceptance This means that one party must make an offer and the other party must accept that offer. There are some interesting things to note here. It has been decided that a supermarket is not making an offer by displaying its goods. The customer, in fact, makes the offer to the supermarket at the check-out. An offer will lapse if you make a counter- offer. However, a mere enquiry as to whether the other party would accept different terms will not cause the original offer to lapse. Another interesting fact is that a postal offer is accepted once you post the letter of acceptance. In such a case, a valid contract will be formed even before the other party knows that you have accepted his offer! Often these days, when you buy a shrink-wrapped product, you will find a notice on the outside of the packet stating that breaking the shrink-wrap constitutes acceptance of the seller's offer and all the conditions that go with it. The terms of a contract must be communicated to a person before he accepts them. After the contract has been made, one party cannot unilaterally impose additional terms. For instance, if your company runs a car-park and you do not want to accept liability for damage to vehicles parked on your yard, you must tell the motorist the conditions of parking before he parks his car and not later, after there has been an accident.
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Consideration "Consideration" is the second half of the bargain. If I offer to sell you a motorcar for $30,000, then the $30,000 is the "consideration". It is often the price paid. It is important to note that consideration does not have to be adequate to form a binding contract. A contract to sell a diamond ring for $1 is a valid and legally binding contract. A mere promise is not legally binding. For example, if I promise to repair your car for free, there is no contract as I do get anything for promising to do the repairs. There is no consideration. However, there is one big exception to this rule. If the promise is made in a written document called a "deed", then the promise to do something for free is legally binding. A "deed" is a document that is witnessed and says at its end that it is "signed, sealed and delivered". It is interesting to note that a mere promise is legally binding in systems of law that derive from Roman law. These are all continental European systems such as German, French, Italian, Spanish etc. A few English-speaking countries have systems derived from Roman law. These include Scotland, South Africa, Zimbabwe, Sri Lanka, and Louisiana. Legal capacity Persons under the age of 18 years are liable only on contracts for "necessities". Necessities would include food, clothing, housing, medical attention etc. These days, it would also probably include a car for getting to and from work. With other types of contracts i.e. for non- necessities, a minor either will not be bound at all or he can repudiate the contract when he reaches the age of 18. If a bankrupt obtains credit for more than $500, he must disclose the fact that he is a bankrupt. Consent There must be genuine consent to the contract. Often there will not be genuine consent if one person is under a misapprehension as to certain fundamental facts. For instance, if I sign a document thinking that the document is an ordinary letter when it is in fact a Will, then the Will not be validly signed. Or suppose I contract to buy a specific veteran motor-car from someone. However, unknown to both the seller and me, the car had caught fire and had been destroyed. There will be no valid contract in such a case. Or if I am induced to enter into a contract by the fraud of another, I do not have to carry out my side of the bargain if I do not want to. Or suppose that I am threatened with force into signing a contract, and then there will be no valid contract. Legality of objects Contracts to commit crimes or to engage in immoral acts are void. Contracts of gambling are void.
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Also, contracts in restraint of trade are void if they are too wide. For instance, I sell my business of civil engineering contractor to John. To prevent me starting up in business again and competing with him, John insists that a clause be included in the sale agreement stipulating that I will never again engage in the business of civil engineering contracting. This agreement would be void. If John had insisted on a clause that I would not engage in civil engineering contracting within a radius of 10 kilometers and for a period of three years afterwards, then that agreement would probably be valid and enforceable. The restriction must do no more that protect the goodwill of the business that John bought. Anything beyond that will be unenforceable. It is important to note that, as a general principle, contracts may be validly formed by word of mouth as well as by writing. The popular conception that writing is necessary to form a valid contract is erroneous. Take for instance contracts of employment. The popular myth is that some employees have contracts and some do not. The truth is that every employee is employed under a contract of employment. Most contracts of employment are by word-of-mouth and are valid contracts. However, the law does require some contracts to be in writing. Some of the more important contracts required to be in writing are 1) sale of land and property, 2) sale of goods having a value of more than $20 (in some States only), 3) a lease for a period of more than three years, 4) transfer of shares in a company, 5) a contract of guarantee. When a written contract is being drawn up, it is very important that all the terms of the contract be included. It is usually very difficult later to rely on any oral terms that are not included in the written contract. In general, you may assign a benefit under a contract to someone else without the consent of the opposite party to the contract. Also, in general, you may not assign your liability under a contract without the consent of your opposite number. For example, if I am owed a debt of $100 by John, I can assign that debt to Tom without the consent of John. On the other hand, if I owe John $100, I cannot assign my liability to Tom to pay the $100 without the consent of John. It is most important that you read every word of a contract and understand every word before signing. In general, you will be bound by the written terms of a contract that you have signed. This will be so even though you had not read them. In most States, the right to sue under a contract lapses after six years. In other words, you must commence legal action within six years of the breach of contract. An aggrieved party can recover compensation for breach of contract. The compensation to be recovered is the foreseeable loss arising from the breach. The Court can also issue a decree of specific performance when appropriate. This is usually only done when the contract is for the sale of land and the seller is refusing to go through with the sale. In such a case, the Court can order the seller to transfer the land.
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VOID, VOIDABLE AND UNENFORCEABLE CONTRACTS A void contract is one that is entirely destitute of legal effect. A voidable contract is one that is capable of being affirmed or rejected at the option of one of the parties, but which is binding on the other. An unenforceable contract is one that is valid, but incapable of being sued upon or proved. Certain requisites are essential, and, if they are absent, the contract is said to be void. By this it is meant that it has no legal effect whatever. Clearly, in such a case, there is no contract at all, and it is a misuse of terms to speak of it as such. A transaction or agreement cannot be void and be called a contract, so it is more accurate to say that the transaction or agreement is void. Examples are agreement with minor, agreements without consideration, agreements which are in restraint of trade or marriage or of legal proceedings, wagering agreement. A voidable contract is not destitute of legal effect, but may be valid and binding. It is a contract that is capable of being affirmed or rejected at the option of one of the parties. It is binding if he chooses to affirm it, and is of no effect if he chooses to reject it. The other party has no say in the matter. It will seem, at first thought, that certain agreements said to be void are not so in fact. For instance, as we shall see, an agreement may be void on the ground of mistake, or, in a few cases, because of the infancy of one of the parties; but, if the mistake or infancy is not pleaded in the action to enforce it, the parties will be held bound. Such an agreement, however, is just as void as an agreement to do something which the law forbids. The cause of nullity is latent, but this does not alter the character of the transaction. It is void if the defendant chooses to prove it so. If the defendant in these cases may, at his option, avoid the contract, or let it stand, there would seem to be a certain unreality in the distinction between void and voidable agreements; but this is not so in fact. In case of voidable agreements there is a contract, though it is marked by a flaw; and the party who has the option may affirm it in spite of the flaw. Where, however, an agreement is void, it falls to the ground as soon as its nullity becomes apparent. It is incapable of affirmance. Another distinction is in the fact that in case of voidable contracts innocent third persons, acting in good faith, may acquire rights there under, and thereby cut off the right to avoid it; but no such rights can be acquired where the transaction is void.
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A contract which is unenforceable cannot be set aside at the option of one of the parties to it. The obstacles to its enforcement do not touch the existence of the contract, but only set difficulties in the way of action being brought or proof given. The contract is valid, but because of these obstacles it cannot be enforced. POINTS TO REMEMBER WHILE SIGNING A CONTRACT The following should be done and kept in mind before signing a contract:Understand the contract You have the right to understand a contract before you are asked to sign it. If there is something you don’t understand, ask for an explanation. If you have doubts about a purchase, go home and think it over. Don't be pressured into signing before you are ready. Statements that you must purchase today to get a good deal are rarely true. Never sign a contract with blank spaces Cross out any blank spaces and any statements that do not apply to your purchase. Get all promises in writing Promises a salesperson makes should be written on the contract. If the seller has promised you something, make sure that it is written on the contract. If the seller won’t put it in writing, don't sign. Make changes on the contract before signing If you want to add or delete something in the contract, do it before you sign. Get an exact copy Get an exact copy of the contract when you sign it. Don't let them tell you that a copy will be mailed to you later. These five points should be kept clearly in mind while signing a contract for anyone and for anything.
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REFERENCES I have used the following references to complete my assignment successfully: http://en.wikipedia.org/wiki/Consideration_under_English_law http://chestofbooks.com/business/law/Handbook-Law-Of-Contracts/ChapterVI-Capacity-Of-Parties.html http://members.iinet.net.au/~patrick6/kiss37.html http://en.wikipedia.org/wiki/Offer_and_acceptance http://dca.lacounty.gov/tsContractSigning.html
Common Law (course book)