Contract (Essay Sample)

Contract
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Contract
In simple words, contract can be defined as a legally acceptable agreement that is reached at by two or more parties. Other scholars also describe it as a promise or set of promises of which law provides a remedy and performance of which the law recognizes as an obligation. An important consideration in a contract is usually that it is enforceable. The beginning of the settlement is marked by the approval of terms and conditions of the agreement by parties involved and hence making it a binding contract (Adamson, 2012). However, it is worth noting that whereas all contracts may be agreements, all agreements may not qualify to be contracts.
Contracts may be classified into four different categories. First category is the written or explicit contracts. These kinds of contracts require the agreement to be in writing and embodied in a formal document. The other category is for the contracts that require written evidence such as memorandums or notes describing briefly subject matters of the contract. The other two categories are simple contracts and contracts under seal. Consider the case of Jim, who wishes to acquire a TV set from a wholesaler on credit. The two parties, Jim, and the wholesaler may enter into a higher purchase agreement which is a form of a written contract. Normally in contracts under seal, the contract is drawn by one of the parties, sealed and sent to the other party of the contract for approval. These kinds of agreements include mortgages and lease agreements.
The contract comes into existence once an offer is made by one party and unequivocally become accepted b y the other party. In our case once Jim passes his offer for acquiring the TV set on credit to the wholesaler, and he accepts, then automatically they get a higher purchase agreement. In all cases for a contract to be legally binding, it must satisfy or meet certain five essential elements. These constituents of a contract that makes it legally enforceable agreement include; offer and acceptance, capacity and intention, consideration as well as legality and formalities in case there are any (Blanchard, Hart & Blanchard, 2006).
An offer is defined as a manifestation by of the parties to a contract of his/her intention to contract with the other desired party. The individual involved in manifesting his or her intention is the offeror and the other party that the manifestation is being passed to kids the offeree. In our case Jim is the offeror while the wholesaler becomes the offeree since Jim is sending his request to acquire the TV set under higher purchase agreement. However, the contract may collapse under certain circumstances. When the time set aside for acceptance of the tender expires, then automatically the offer lapses. It may also terminate if it gets withdrawn before the acceptance stage or even after a reasonable period depending on the circumstances. In most cases, acceptance of the invitation to treat does not guarantee the creation of an agreement. Jim and the wholesaler may accept to enter into a negotiation, but this does not necessarily mean that there are officially in a higher purchase agreement. After the acceptance of the offer, both parties may however differ on certain terms of the agreements such as the interest rates and payback period constraining them from ending up with an agreement of higher purchase.
For a contract to be enforceable by law, only that has been offered by a party can be accepted. The wholesaler must, therefore, take exactly as Jim offers hi without any additional conditions on top. In cases where new terms and conditions are suggested, it is assumed as a counter offer and may be either rejected or accepted. Before Jim and the wholesaler reach to a final agreement there may be several offers and counter offers’ offered but it is the acceptance that finally brings all negotiations to an end. The wholesaler can give the approval either verbally or even in writing (Blond, Petrillo & Gruning, 2009).
It is also essential that both the wholesaler and Jim before entering the contract intend to establish legal relations and should be aware that the agreement can be enforced by the law. This intention to create legal relations is recognized so that the contract does not have to state clearly that all parties understand and are ready for any legal consequences that may follow.
Breach of a contract does not necessarily discharge it but rather give the innocent party an opportunity to handle it as an existing contract. There may be two forms of a breach of a contract namely, actual and anticipatory. If in our case Jim expresses in advance to the wholesaler his intentions not to meet the requirements of the agreement by the due date, then this is a form of anticipatory breach. The wholesaler may however take any of the following steps being the innocent party. The wholesaler may sue in Jim for damages, but he should be in a position to prove his willingness to perform in the agreement as well as Jim’s anticipations to breach the contract. The wholesaler also has another option of suing for decree of specific performance if Jim anticipates violating the contract. In this case, the wholesaler may apply for the equitable remedy ...