|
Brian Olson Business Law 8 January 2001 A contract is a binding agreement
made between two competent parties that can be written verbal or implied. The
purpose of a contract is to create an agreement that can be supported by the law
(West’s Encyclopedia). As we enter the new millenium, and with the increase in
the number of businesses (including e-commerce), we need to know more and more
about contract law.
Knowledge of contract law can also protect consumers and
businesses from misunderstandings. The six elements of a contract are: binding
agreement, competent parties, form required by law, legal in purpose,
consideration, and genuine assent.
Binding Agreement A binding agreement is a
contract, verbal or written, between parties that is bound by law. When two
competent parties make an agreement, it is considered binding. A binding
agreement must have an offer and an acceptance.
An example of a binding
agreement would be if Kelly told Jamie that she would buy her car for $6,000 and
they both agreed to it. This agreement is legal in purpose, supported by
consideration, is in the form required by law and is made by two competent
parties who gave genuine assent. Competent Parties To make an agreement a legal
contract, both parties have to be competent.
All adults are assumed to be
competent. It’s important for people who are making contracts to be of sound
mind. This means that the people involved cannot be under the influence of any
substances or be mentally ill. Convicts and enemy aliens are also considered to
lack capacity. Capacity means the ability to understand one’s actions and the
effects of those actions.
It is legal for minors to enter into contracts, but
they cannot be bound by law because younger people have limited experience and
are more vulnerable than adults (Mietus 163). The purpose of competency is so
people don’t take advantage of those who are not competent when entering into
contracts. When an adult makes a contract with a minor, the minor is the only
one who can disaffirm the contract.
The adult is bound by law (Mietus 163). An
example of a contract that cannot legally be bound would be if John wanted to
buy Ryan’s car for $2000 and Ryan refused. Later that day, John took Ryan out to
a bar and offered him several drinks.
|
