My Contract Report

My Contracts Report

Bobby R. Hanna

American Intercontinental University

Abstract

This paper will discuss the four elements of a valid contract which are an offer, acceptance, intention of legal consequences and consideration. It will describe the objective theory of contracts and how it applies to the lawsuit against the Pesi Company’s advertisement of a Harrier Jet. Thoughts on why the courts held that there was no valid agreement will be mentioned. The way advertisement is generally considered and how the case differ from a unilateral contract will be discussed.

In a binding contract, there are four elements needed for it to be legal by law and valid and the first is an offer, which must be definite, clearly stating to do something. An example would be a quotation by a sub-contractor to the main contractor along with an offer to lease. The offer will expire when the time for acceptance has ended or if the offer is withdrawn before it is accepted.

The second is acceptance which only what is offered can be accepted. The offer must be accepted exactly how it was offered without any other conditions. Any new terms that are added or suggested, would be regarded as a counter offer which can be either accepted or rejected. The acceptance of the offer that ends the negotiations establishes the terms and contract conditions and can be given in writing, verbally or by an action that clearly indicates acceptance of the method prescribed by the party that made the offer for it to be effective.

Third is the intention to create legal relations is presumed, so the contract does not have to expressly state you understand and intend legal consequences to follow. The contracts require that the person’s or parties intend to enter into a binding legal agreement and the contract must intend to create a legal relation which the agreement can be enforced by law. If the parties in a contract do not want to be legally bound, it must be stated in the contract for it not to be legally enforceable.

And the fourth element is consideration which is what each party gives to the other on an agreed price for the other’s promises. Normally the consideration is monetary in payment but can be anything of value or the promise of a service. The courts will not intervene where one party has made a hard bargain unless fraud, duress or unconscionable conduct is involved. (SBDC, 2013)

The objective theory of a contract is a doctrine which states, a contract is not an agreement of a subjective meeting of the minds but a series of external