A contract is defined as an institution which guides the behavior and conduct of those who enter into it. It usually occurs when two or more people, organizations or even companies make an agreement that can be enforced through a court of law and penalties may follow if the guidelines are breached (Goodchild, Herring& Milosevic, n.d). Laws about contracts vary and depend on the field which the contract involves.
Parties within an agreement need only to follow the principles or the guidelines as arranged in the contract and everything else works out as planned. In some respects, the players in the contract can create their own laws in which they are supposed or obliged to follow most of the times in front of a lawyer. To have a valid contract, an offer and acceptance to the offer are vital in making the contract work thus when the conditions of the offer are agreeable to the parties involved, then an agreement is reached.
Among the components which tend to make the law binding are the agreement and the consideration (Wald, n.d). The agreement entails discussing and then reaching to a consensus where a consideration which most of the times is the price as agreed upon.
What makes most of the agreements not qualify to be contracts is the lack of a law that binds and enforces them. For instance, this is what distinguishes a contract and an agreement. In case of any misunderstanding, the aggrieved party should always obtain relief from the law that enforced the contract (Steinberger, 2007).
In line with the given case study, there exists no contract between Rita and the collector since the collector just informed Rita of how much the necklace could have been worth but we are not told anywhere that the two sat down and wrote an agreement in which they agreed to fulfill.
The promise to do or not to do from an act is called consideration; every contract contains the promise and consideration. A promise is often made in return for a consideration and in our case the price of the necklace was the consideration. To most people, consideration is described as the key aspect of a contract but what many fails to understand is the fact that there being no binding factor, any player in an agreement can walk out at will since there are no repercussions or penalties which would follow the breach. In our case there was consideration that the necklace was worth 200£ and thus the only thing lacking was the law binding the collector to honor his pledge. The two just had an agreement but writing and registration was not there nor was there a law that could have forced the collector not to breach the agreement. The collector could still have demanded for the necklace at a lower price than the agreed since there was no evidence to show that they had agreed that the necklace was that worth. The terms of the agreement were also not certain since there is nowhere in the case study we are informed about the certainty of the collector paying the amount thus the contract still stood vague since either party could have refused to enforce it.
A contract is only valid if there exists a law that binds the players. It is the law aspect that distinguishes a contract from an ordinary agreement thus we can say that there being no a law binding the two parties, there was no way the agreement between the collector and Rita could have been valid.
Reference List
Goodchild, A; Herring, C., & Milosevic, Z. (Not Dated). Business Contracts For B2B: University Of Queensland. Web.
Steinberger, J. (2007). Is This Contract Valid?
Wald, H. M. (Not Dated). Requirements of a Valid Contract. Web.