Contracts Case Study

Even through the operation of contracts, business law shows how contracts may be classified in several ways depending on the manner in which they are created, expressed, or performed. These include either oral or written; it may be expressed or implied; and it may be formal or simple. I will use what I have learned in this course to show the true propose of contracts. I will show what is needed in a contract to make it legally enforceable. I will discuss how a contract must contain the following six elements: an offer and acceptances, a mutual agreement, a consideration, a competent parties, and legality of purpose, and proper form. I will also discuss the impact of contracts in everyday operation of a business. This will be done through analyzing, identifying all the legal issues and elements of a contract.

A contract is a legally enforceable agreement that is created when two or more people agree to perform, or to avoid performing, certain acts that they have a legal right to do and that meet certain legal requirements (Liuzzo, 2010). All contracts are agreements between two parties. The purpose of a contract is that a contract may be created for any number of reasons: to make the sale of merchandise or service, to employment, or to the transfer of ownership of land or personal property such as a sailboat. Contracts may be extended and revised as needed to reflect the wishes of the parties (Liuzzo, 2010). An example of a contract exists between an assistant and the manger. That contract can be extended once the assistant becomes a partner and so forth. Contracts can be extended or changed as needed to reflect the contractual relationship.

To be a legally enforceable contract, it must contain the following six elements: an offer and acceptances, a mutual agreement, a consideration, a competent parties, and legality of purpose, and proper form. Now if one of these elements is missing, then the court will refuse to enforce the contract. The impacts of contracts in everyday operation of a business are very important and it is done through analyzing; identifying all the legal issue and elements of a contract.

The most important feature of a contract is that one party makes an offer and for an arrangement to be reached that the other party accepts. After a valid offer has been made the two parties should ask to enter a defined contractual agreement. To make sure an offer of the house price is clear and definite. The price needs to be clearly communicated to the offering party. Offers can be made to individuals or to the general public, such as advertising. After the offer has been made, then negotiations between the two parties can begin, conducted personally or through an agent. In the process of buying a house it's usually through an agent (Contract Law, 2001).

The parties of a contract must come to a mutual agreement. A good example would be when one buys a home through a mutual agreement, which is when two parties come to an agreement on the worth of the home. Both parties must understand the agreement, and make sure no misunderstanding or mistakes exist between the two parties (Contract Law, 2001). The contract must show that a mutual agreement has been made, referred to as the meeting of the minds (Liuzzo, 2010).

An exchange of consideration must be included in any valid contract. Between the parties something of real value must be exchanged, whether it can be cash, tangible objects, the performance of an act, an agreement to refrain from performance of an act that the party has the right to perform or a promise of future consideration. The difference between the exchange of consideration and a unilateral promise is that a promise to do something without an exchange of consideration is not an enforceable contract. For example, if Joe tells Jack that he will buy the house for a certain amount then Joe has made a promise to purchase the house. On the other hand, Joe tells Jack he will pay him money in exchange for the house, a consideration has been exchanged.

The parties to a contract must be competent, that is, be capable of understanding what they are doing. They must be of legal age, and normal mentality. The functioning of a party's mind must not be impaired by injury, mental disease, or the influence of drugs or alcohol (Liuzzo, 2010). To the case at hand both parties that are involved in the purchase of the home must be of legal age and not impaired in any way in order for this contract to be valid.

The intent of the contract must not violate the law. The courts will not enforce a contract to do something that violates the law (Liuzzo, 2010). If the formation or the performance of a contract is illegal, resulting in a crime and/or tort, or opposing public policy or interest, the contract is usually considered void (Barnett, 2003). An example of this would be if the contract involves purchasing a stolen item or an illegal drug, or involves fraud or harming someone would be considered void. In my example, of the purchases of the home if the seller sold the home without revealing that it had toxic mold or that there was a second mortgage on the property that they did not pay this would cause the contract to be void.

Certain contracts, such as those involving the sale of personal property for $500 or more, or those that cannot be fulfilled within a year, must be in writing to be enforceable. Other kinds of contract are not only in writing but must also follow a prescribed form, such as containing the signatures of the parties. These are known as proper form (Liuzzo, 2010). When purchasing a home the contract must be in writing and needs to have many forms that need to between the seller and buyer and between buyer and lenders. There are many forms that need to sign during a sale of property as big as a house. These essential elements are necessary in an agreement in order for it to be legally enforceable. There is a breach of contract when a party fails to perform the stated obligation in a contract. The injured party has several recourses. The injured party may rescind the contract or release the other party from the obligations stated in the contract, or more likely, the parties may agree on innovation. Any of these three resolutions may be enacted without litigation. This can only be determined if ones knows the type of contract being if used.

A contract is an exchange of promises between two or more parties to do something, or refrain from doing something and a legally binding agreement that is enforceable in a court of law. An agreement is reached when an offer is accepted. The parties must have the necessary capacity to contract and the contract must not be trifling, indeterminate, impossible or illegal.

A breach of contract is recognized by the law and remedies can be provided. Contracts can be classified in several ways depending on the manner in which they are