Unit 1 - Resolving Conflict in the Marketplace Flashcards
What is a contract?
A contract is a legally binding agreement between two or more parties which is enforceable by law.
Name the 8 elements of a valid contract.
- Offer
- Agreement
- Intention to contract
- Capacity to contract
- Consent to contract
- Consideration
- Legality of purpose
- Legality of form
Define OFFER
An offer is made when one person asked another to enter a deal. This can be made orally, in writing or by conduct.
Define AGREEMENT
The person receiving the offer accepts all the terms of the offer.
Define INTENTION TO CONTRACT
Both parties must be aware that they are entering a legally binding agreement.
Define CAPACITY TO CONTRACT
All people and businesses have the legal ability to enter a contract except for the following:
Any person under the age of 18
&
People who are mentally incapacitated
Define CONSENT TO CONTRACT
The parties entering into a contract must do so voluntarily. A party cannot be put under any physical or mental pressure to enter into a contract.
Define CONSIDERATION
Each party in the contract must give something of value to the other party.
Define LEGALITY OF PURPOSE
A legally binding contract must be created for a legal purpose. Eg. A valid contract cannot exists to buy illegal fireworks.
Define LEGALITY OF FORM
Contract must be drawn up in the correct legal format. This can be done orally, by conduct or in writing.
Name the 4 ways to terminate a contract.
- Frustration
2 Breach of contract - Performance
- Agreement
What does FRUSTRATION mean?
A contract is ended due to unforeseen events arising. Eg. a party member dies.
What does BREACH OF CONTRACT mean?
If a clause or warranty is broken, the party responsible must compensate the innocent party.
