Common Law 1

1. Introduction

The report will help to understand the essential elements of a valid and legally binding contract and its role in a business context include business agreement, key elements, offer, rule of intention and the contracting parties. Another point is the significance of special terms in a business. It also shows the law standard form contracts and the effect of exemption clauses in attempting to exclude contractual liability.

2. Essential elements of a valid contract

2.1 The different types of business agreement

Although sales agreements can be executed between merchants and consumers, the highest value sales agreements are usually executed between businesses.

 Employment agreement:

A business form called an employment agreement which an employer agrees to employ an employee and outlines the employees' duties, duration of employment, compensation, nondisclosure agreement and option to terminate.

 Rental agreement:

Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from lawnmowers and washing machines to handbags and jewelry. (^ "If you want it, rent it ... from a 'must have' handbag to an Aston Martin", The Observer, 2009-01-04. Retrieved on 2009-09-09.)

 Sales of a contract

A contract of sale is a legal contract an exchange of goods, services or property to be exchanged from seller to buyer for an agreed upon value in money paid or the promise to pay same.

 Franchise agreement:

The franchise agreement is the cornerstone document of the franchisee--franchiser relationship. It is this document that is legally binding on both parties, laying out the rights and obligations of each. (Business law, 2010)

 The Sub-contracting Agreement

It is the legal instrument by which a person called the "entrepreneur", hires another person, referred to as "sub-contractor" to perform part of the work related to its field of expertise, in consideration of the payment of a specified or determinable amount. (Edilex, 2010)

2.2 The importance of the key elements

 A valid contract is one contain key elements

 A contract without key elements may become an invalid contract.

 An invalid contract may be:

- Void: The parties are not bound by it.

- Voidable: A party may terminate at his option.

- Unenforceable: It is a valid contract but if either party refuses to perform the contract, the other party cannot compel him to do so.

 In case of an invalid contract, an organization may not recover, for example, property that was transferred to a third party. Both time and money may be lost dealing with an invalid contract.

 It is therefore important that key elements are required for the information of a valid contract.

2.3 Apply the rules of offer and acceptance in Claim 2 and consider any impact of new technology

1) Offer and acceptance analysis is a traditional approach in contract law used to determine whether an agreement exists between two parties. As a contract is an agreement, an offer is an indication by one person (the "offeror") to another (the "offeree") of the offeror's willingness to enter into a contract on certain terms without further negotiations. A contract is said to come into existence when acceptance of an offer (agreement to the terms in it) has been communicated to the offeror by the offeree. (Wikipedia, 2010)

2) Online contracting takes place over the internet, over online services and through private networks such as Alimama.com in the Claim 2 with electronic data interchange. According to the law a contract comes into being when a legal agreement has been accepted. All websites in the e-commerce category are built to offer something to the consumer.

3) In Claim 2, Mr. Khoo didn't have entered into an enforceable contract with Alimama.com. Because a major issue in contract is the contract for licenses. There is no contract or agreement that is signed before the software can be installed. There is no agreement between them, so it is not a valid contract. And Mr. Khoo's credit card had not been charged with any payment.

4) Impact of new technology: the new technology impact our life in many areas such as the distance studying by distance learning, online shop helps us choose what we want easier and no need to carry. And there is impact on the communications and health. People should choose suitable technology and use it rightly.

2.4 Assess the importance of the rules of intention and consideration of the parties to the agreement.

 The rules of intention in commercial agreement

Agreements "subject to contract" Where there is a commercial agreement it is presumed the parties intend to create legal relations. However if the parties expressly deny intention by stating that negotiations are 'subject to contract' or that any agreement is to be 'binding in honour only' then there is no contract. When business people enter into commercial agreement, it is presumed that there is an intention to enter legal relations unless expressly indicate otherwise.

In Claim 3, there was an intention to create a legal relation by both parties from legal perspective between Lim Associates and Lowerey Music School. Because Johnathan has a number of regular clients, he also charges $2,000 per job for producing small business accounts foe tax filing purposes for other people. And Ms. Molly told Johnathan she could only pay half of the money. It entered a commercial agreement; both parties are intention to create legal relations.

 Consideration in an agreement

Consideration is the "price" of the other person's "promise".

Basically, for a contract to be valid there must be an exchange of goods and/or services. Because the vast majority of contracts are for sales of some type, consideration usually takes the form of an exchange of money for goods or services.

Consideration