|
|
| |
| Home » Contract » Contractual Formation |
| |
Contractual Formation |
|
|
The rules about Contract formation, was developed as early as the 19th Century. Contractual Formation, came into being due to the growing concern for certainty and a reasonable degree of precision so that business people knew where they are heading for.There are certain Essentials of Contractual formation. To form a contract the requirements are agreement and consideration.
|
It is also said that there is a third element in Contractual Formation, namely, intention to create legal relations. The introduction of this third element is rarely a problem and very often this separate element in vast majority of cases goes without mentioning. Below we will discuss all the essentials of Contractual Formation :
Agreement: Agreement provides us or entails us the transformation of negotiations into a settled bargain or deal. The process engaging the negotiation is not a contract and the law needs to be able to determine when the process has ceased and the parties have reached finality in their commercial Agreement. To determine the answer for the question whether the parties have reached agreement or not, the rules of offer and acceptance come in for application. When a properly formulated contract of offer has been made by one party and accepted by the other, then there is agreement at the moment of acceptance, or more specifically, at the moment of communication of acceptance. There are certain questions raised in this apparently simple process, like, was an offer made at all? Who makes an offer in certain types of transactions, for example, in auctions or tenders? Is offering the price list enough? Questions related to the act of acceptance can be does acceptance have to be communicated? Can you accept silently? Can you accept by just getting on with the commercial task? And many more.
Consideration: We have already noticed that consideration involves a notion of exchange. There are certain rules governing the terms and conditions of exchange and what can be exchanged in order to amount to a good consideration. We will have a look at these rules once we examine the requirements of offer and acceptance. The relationship between the rules of offer and acceptance on the one hand and the rules of consideration on the other hand is that the exchange which constitutes an acceptance of an offer. The effect of exchange of promises is brought by acceptance.
Offer: It took several years for the courts to work out what constitutes offer. An offer in this case is important because once an offer is being made by you, it bounds you to a contract because of someone else’s action. A famous American Contract Textbook writer has once stated that “an offer confers powers on the offeree”. It confers a power on another to bind you in contract. Here it is worth mentioning that you are always free to withdraw an offer as long as it has not been accepted. But as long as the offer continues, it needs to be accepted by the other party to create a legally binding relationship. You can also make conditional offers. Here this kind if offers cannot be accepted if the conditions are not been satisfied.
To gain more detailed knowledge on Contractual Formation log on to documentsandcontracts.com
|
|
| |
|
|
|
|
|
|
