A Contract and Its Essential Elements
Dutta states that one of the major components of the contract is the offeror what is being given in the contract. The offer must be acceptable to all the involved parties with no conditions. In case any fresh terms are recommended, this turns out to be a counteroffer, not a contract. This is subject to acceptance or rejection by the parties. Offers and counteroffers may occur several times before an agreement is reached.
However, there is no importance on the person who makes the final offer, but the most valuable thing is the acceptance of that offer. This brings the negotiation process to an end with the creation of a contract. It is worth noting that a contract is legally binding, and any breach of the terms and conditions of the contract results in a breach of contract. The person to whom the offer is being made can either reject or accept the offer. On accepting, there is a legally binding contract, but on rejection, there is no contract. The process of acceptance of a contract can be done verbally, in writing, or by action.
Some actions are assigning acceptance of the contract. However, the method used to show your acceptance to the contract must conform to the method that the offerer applied to make the offer. The method must be effective and rational. In any contract, there must be an intention to create legal relations. All the parties involved must have an intention to create a legal relationship. This is to say that they should be in a position to know that the agreement they are entering can be enforced to law. Nevertheless, this requirement in most cases is presumed to exist and whoever is entering into a contract needs to say. It is something assumed to be known to every person who intends to enter into contracts. He should be ready to follow the consequences.
On the side, one of the parties to the contract may decide that the contract should not be legally binding. In such a case, the party must make it known to the other party. Consideration is the other requirement of a contract. In order for a contract to be binding, it must be enhanced by valuable consideration. This is where one party to the contract promises to fulfill an activity in return for a promise from the opposite party to provide a benefit. In other words, it is the price paid to enter into a contract. Consideration is defined as the price that one party promises to pay to the other parties in the order they can enter into a contract. In most instances, consideration is the payment of cash, but this is not necessarily the case.
The payment might be fair or unfair depending on the agreement of the parties. It is advantageous to note that in entering into contracting, rudeness or coercion should not be employed. One of the examples of a contract is between John Smith and Some Lone, where they agree on the licensing of the game. They enter into a contract that Lone has an exclusive right to sell the game and be paying royalties to Smith. The warranties are clearly stipulated, for instance, no infringement of the third parties’ rights. Terms and conditions are given out, for example, license fees, records, payments, samples, and conditions for termination.