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Elements of Agreement Required for the Formation of a Contract



Abstract

According to Pty Ltd and the Minister for Education case, an agreement has been set in by the two parties and thus required to be fulfilled. In this case, all legal requirements and aspects of the agreement are to be followed by parties in order to make the contract binding. In practice, the agreement forms a crucial aspect of contract formation. In addition, other elements involved in contract formation include intention and consideration. On the other hand, parties into a contract must be aware of what they are agreeing about. For instance, in the contact of sale between two parties, there must be a general agreement as to what is being sold, the price being offered and the transaction mode (Stone 1993).

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Contract's Elements of Agreement

The law defines a contract as a legally enforceable agreement between two or more parties to the contract. In this perspective, the agreement should be enforced by a court of law. Additionally, the formation of contract subsequently comes with the formation of legal obligations among the concerned parties. Therefore, there is the incorporation of the issue of rights and duties in the contact formation. In this regard, rights and duties are clearly outlined by a court of law when enforcing the contract. Hence, the rights and duties of the concerned parties are to be outlined and followed to the letter.

In the case of Pty Ltd and the Minister for Education, there was an agreement between both parties. In general, the minister for education had struck an agreement with Pty Ltd for construction of a high school in the State of Western Australia. According to this case, the element of agreement between both parties has been clearly manifested and written down. In this case, the contract becomes binding. According to the law, an agreement is binding if the parties involved are willing to enter the contract without being forced into it.

On the other hand, an agreement will be binding if the parties in the contract put into writing the terms and conditions of the contract. The law asserts contract enforceability is valid if there is an agreement, offer, acceptance, and consideration. Moreover, the offer by the Minister for Education to Pty Ltd was duly accepted (Todd, Burrows and Finn 2011). The law claims an agreement can be reached in various ways. For instance, it can be reached after negotiating with the concerned party, accepting the terms and conditions of the agreement as set out in a document and it can also be without express terms.

Generally, the whole process of reaching an agreement can be summarized as embracing an offer and acceptance. In this case, an offer is a precise indication of the terms and conditions of the agreement. Nevertheless, acceptance refers to agreeing to set out terms and conditions of the agreement.

Furthermore, a contract can be breached due to the failure of its performance. In this perspective, if a party to the contract fails to obey the rights and duties employed in the formation of the contract, there is a breach of the contract. Additionally, failure to discharge what is expected of the parties leads to a breach of the contract. In this case, both parties had set their rights and duties before coming to an agreement (Todd, Burrows and Finn 2011). However, the Minister for Education did not receive an acceptance from the Pty Ltd constructions, and thus, an agreement had not been reached. Overall, Pty Ltd had sent the acceptance letter in time through a facsimile machine. Because of delays from the Minister’s office, the letter did not reach the addressee on time. In this position, the Minister had to take the whole responsibility since the problem was at the office.

According to Placer Development Ltd v. Commonwealth (1969) 121 CLR 353, the party making the offer is referred to as the offeror while the party receiving the offer is referred to as an offeree. What is more, there is a myriad of requirements needed in order to make an offer. For instance, an offer should be sufficiently complete. In this case, it means that the offer or transaction at hand requires being workable. Moreover, an offer ought to be promissory. Accordingly, an offer comprises of what to give, do and thus taking a liability (O’Sullivan and Hilliard 2011).

In Carlill v. Carbolic Smoke Ball Co [1893] 1 QB 256, an offer can be directed to a particular person or a group of persons in exceptional cases. According to this case, the carbolic smoke ball had issued several offers with the sole objective of making as much of sales as possible. Additionally, an offeror can decide to reject a notice of acceptance if one so wishes.

Generally, an offer is considered to be acceptable if the offeree communicates the same to the offeror within a stipulated time span. Besides, an offer made through a fax or telex is considered to be accepted if the message is received by the offeror. However, if the acceptance is made through post, it is made to be effective if posted.

In Henthorn v. Fraser [1892] 2 Ch 27, the condition of acceptance of an offer is described. In this perspective, the acceptance of a contract and its subsequent revocation is further analyzed. As the ruling states, revocation or acceptance of offer through is an acceptable way despite the fact that the offeror unknowingly accepted the offer (Kelly, Hayward, Hammer and Hendy 2011).

Therefore, according to the ruling of the above cases, it is clear that one can determine the conditions for acceptance of an offer. In this way, an offer sent to the Minister of Education was valid though unknowingly received. In addition, Pty Ltd had sent the letter through the post in time. Consequently, the agreement between the two parties was still valid and enforceable. In accordance with the ruling in the case Henthorn v. Fraser [1892] 2 Ch 27, it is clear that if an offer it timely accepted through fax or telefax it remains valid and enforceable. On the other hand, if the offeror receives an acceptance from the offeree, the contract remains to be legally binding.

Furthermore, a legally enforceable agreement should possess certain features among the parties involved. For instance, the parties involved should be of 18 years of age or above. In addition, the parties to the contract ought to be sane and have the capacity to enter into a legal and enforceable agreement. Meanwhile, parties involved to the contract should comprise the aspect of offer and acceptance (Stone 1993).

Thus, according to the case studies analysed above, the Pty Ltd contract with the Minister of Education is still enforceable. Additionally, the construction company can move to court to petition for breach of a contract between the two parties. In this perspective, Pty Ltd can stand on the grounds that the letter was send on time through the fax machine though the Minister’s office had unknowingly received the offer. As the case stresses, Pty Ltd Construction had all rights to have the construction contract. As a result, Minister of Education can be challenged for not receiving the letter due to facsimile machine problems. In this case, Pty Ltd can still enforce the contract since it is still legally enforceable and binding.

Contractual Agreement between Pty Ltd and the Minister for Education

According to the case, Pty Ltd and Minister of Education assuming that the contract is enforceable, there should be certain contents expressed in the contract. In this case, Minister for Education is liable for breach of the contract between the parties. Additionally, there are certain terms and conditions set in the formation of the contract by the two parties. In this standpoint, if the Pty Ltd construction takes the case to court, it is clear that the Minister for Education will be liable to the breach of the contract. The law emphasizes that the Pty Ltd is entitled to compensation for the breach of the contract by the Minister for Education. In this regard, any party that breaches an enforceable contract shall be liable to compensation as agreed by a court of law.

In general, breach of a contract occurs in a situation when a party to the contract fails to perform to the stipulated rights and duties of the contract. In accordance with the law, the innocent party is allowed to be compensated for the damages involved. In this position, the Pty Ltd construction company is the innocent party which can claim compensation from the Minister for Education for the breach of the contract. Therefore, as the law states, breach of contract has its consequences.

In Hawkins v. McGee, 84 N.H. 114, 146 A. 641 (N.H. 1929), Hawkins surgery by Dr. McGee led to breach of contract. In this perspective, the doctor had guaranteed Hawkins that he would repair his scar tissue through the stated procedure. However, the surgery was unsuccessful, and thus, Hawkins pressed for compensation from the doctor. According to the judge, the case was on how to determine breach of contract. Therefore, the court holding was clear that the plaintiff was entitled to damages for pain and suffering since he could not have endured them if the procedure had proved to be successful (Kelly, Hayward, Hammer and Hendy 2011).

Thus, according to the Pty Ltd construction company, there was a clear definition of terms and conditions concerning the agreement. Additionally, there was an express content of the contractual agreement. In this case, the Minister for Education had, formally, written to the Pty Ltd indicating the terms and conditions of the contract. On the other hand, the construction company accepted the offer through a written letter send through facsimile. Nevertheless, the Minister for Education unknowingly accepted the offer and thus the contract remained to be binding between the two parties.

Overall, acceptance of an offer is deemed valid and effective when the letter of acceptance is posted. In addition, Constructs Pty Ltd had already accepted the terms and conditions laid down by the Minister for Education. In this case, breach of the contract by any of the party is followed by a remedy to the innocent party. Therefore, the innocent party will be entitled to damages upon the breach of the contract.

In Brinkibon Ltd v Sthalwharenhandelsgesellschaft [1983] 2 AC 34; [1982] 1 All ER 293, Brinkibon had telexed a letter of acceptance of the offer from Stahag Stahl in Vienna. Besides, the acceptance was effective since the letter of acceptance was instantaneously received by the offeror. Therefore, according to the case, claims for damages did not hold.

In this perspective, contents of the agreement were binding to all parties, and hence, any breach of the contract by the party would lead to damages. Moreover, the terms and conditions of the agreement between the two parties were implied through writing. What is more, all the conditions laid down in the contract were all accepted by the parties making the contract legally binding and enforceable (O’Sullivan and Hilliard 2011).

According to this case, Constructs Pty Ltd accepted the conditions put down by the Minister for Education. In this perspective, the Minister for Education had set the terms to be followed during the contract formation. Therefore, according to the case, the Minister for Education had laid terms but not warranties. Additionally, the Minister for Education had set out terms which could suit the contract depending on the construction company’s abilities to perform the task. Moreover, both parties are then anticipated to adhere to the terms and conditions through compliance and acceptance of the set terms and conditions. In this case, both parties are expected to enforce the contract since all parties to the contract are willing and qualify to make the agreement contract.

On the other hand, the Minster for Education unknowingly received the acceptance from the Pty Ltd construction company, and thus, the contract remained legal and binding. In accordance with the ruling in Brinkibon Ltd v Sthalwharenhandelsgesellschaft [1983] 2 AC 34; [1982] 1 All ER 293, there should be compensation for damages to the innocent party. In this perspective, the party being sued, the Minister for Education is liable for damages to the Pty Ltd construction company (Kelly, Hayward, Hammer and Hendy 2011).

Nonetheless, Constructs Pty Ltd does not meet the required criteria according to the needs and requirements of the Minister for Education. However, both parties had entered an agreement and stipulated the terms and conditions to be followed during the contractual period. Therefore, the agreement between the two parties holds to be legal and enforceable. In this case, it is clear that even though the Minister for Education had entered another agreement, the previous agreement is still binding and enforceable.

On this standpoint, Pty Ltd can move to court to challenge the Minister’s for Education breach of the contract. Additionally, according to the above case’s ruling, it is evident that Pty Ltd has the right to enforce the contract since it is still legally binding. In this perspective, the Minister for Education can pay damages for the breach of the contract to the innocent party.

Consequently, in contract formation, there should be several conditions and requirements to be put into consideration. For instance, the parties to a contract must come into an agreement. On the other hand, they are to be sane and able to make an enforceable agreement according to the law. In this perspective, all the conditions for a valid contract to be enforced ought to be present. What is more, the aspect of an offer and acceptance between the parties involved into a contract should be well undertaken. In this case, there is to be an offer presented by the offeror while the offeree accepts it. Additionally, during acceptance, the offeree accepts terms and conditions set by the offeror into signing the contract. Thus, there must be a clear distinction between the party to the offer and the party to accept the offer (Stone 1993).

Conclusion

In conclusion, the contractual agreement between Pty Ltd and the Minister for Education is valid and enforceable. Generally, the offer was accepted by the Pty Ltd though the Minister for Education was unaware about the acceptance. In this case, the agreement between the Minister for Education and both parties to construction remains to be valid. Hence, the Minister for Education will be liable to the damages caused to the first party, Pty Ltd. According to the ruling of the cases analyzed, it is clear that the case between Pty Ltd and Minister for Education is enforceable.

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