Business law

Essay by linlinhyuk September 2004

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1. In both cases, it is to be decided whether or not contracts exist between the parties involved for their respective courses of action.

Elements of contract

To be legally classified as a valid simple contract, there are three essential elements:

1) Agreement in the form of an offer and acceptance

2) Intention to create legal relation

3) Consideration

Agreement in the form of an offer and acceptance

Basically, an agreement is reached when the conduct of the parties involved can be characterized in terms of an offer by one party and an acceptance by another. [Brogden v Metropolitan Railway Co. (1877) 2 App Cas 666, H.L.]

In the first case where Leanna told Justin that she would pay him $50 for his help; there was an offer, the $50 being the offer and this offer should be considered as being accepted when Justin thanked Leanna. On the other hand, in the second case whereby Justin owed Rebecca some money, the offer refers to Rebecca offering Justin that he only need to pay half of the money owed if he paid her on time while the acceptance occurs when Justin paid the money on the relevant date.

In both cases, acceptance was communicated from the offeree to the offeror1.

Intention to be legally bound

Parties to a commercial or business agreement are presumed to intend to be legally bound while those to family or social agreement are presumed not to be legally bound. However, if the courts interpreted that there is a proof of the act that creates intention to an agreement, a legal enforcement will be granted.

Insufficient information about the intention is given in both cases. However, as there is no citation of family/social relationship between the parties involved, we presume that the parties intended their agreement to...