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Contract Term Is a Mutual Agreement


The laws, promises, and agreements date back to the origin of humankind. Although, initially the terms of the agreement were verbal, civilization has initiated the use of formal and informal terms as well as the integration of both. Therefore, contract term is a mutual agreement, which enslaves and spells out the rights and duties of the parties involved who in turn have to meet the terms of agreement. However, nowadays the terms of contract apply in almost all sectors of the economy, which enshrines them under the constitution of the sectors (Johnston 2006, p. 8670). Therefore, any negotiation among the sectors or between the sector and an individual take place within the law. Otherwise, it can result to breaching the terms of the contract. For instance, in business-consumer contracts, traders have a substantial advantage since they define the terms in advance without an individual negotiation. Such contracts enhance business transactions and might benefit the consumers especially if the sellers and suppliers follow them to the latter (Matthew 2008, p. 463).

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In employment, terms of contract outline what the employers and employees expect from each other. However, such terms may come from different types of sources such as collective agreements, implied terms and/or in an offer letter from your employer among others. Therefore, the terms of contracts show clearly, the legal binding sections of the contract, as well as those that do not qualify as binding (Mehmet et al. 2008, p. 29). Moreover, if one of the people goes against the laid down terms of the contract, the other is free to sue for the violation of contract. In any undertaking, such legal agreements among parties with written or unwritten mutual responsibilities are tremendously influential. Ending any contact may result to discharge, breach or remedies. Moreover, the remedy can be definite performance of the contract or a ban in equity. Therefore, the remedies give the damaged party, the advantages of the agreement that mighty be better than ‘‘simple reliance damages as in promissory estoppels’’ (Austen 2009, p. 75).

In addition, contract is a form of monetary arrangements in the world. Conversely, the rules in jurisdictions of socialist legal systems, Islamic, customary and civil law vary from place to place. According to the law, whenever the terms of the contract are vague or curtailed then the parties involved have not reached concurrence. Any attempt to agree does not amount to a contract (Maman 2008, p. 255). Otherwise, an inability to agree on the important aspects of the contract may result to its failure. Therefore, every clause in the contract term results to a contractual commitment that when breached may lead to litigation. Terms may carry a slight legal weight, as explicitly stated or implied some times. Guarantee or warranty, however, forms the basis of a contract (Matthew 2008, p. 477). Breaching the terms renounces the contract making one party discharge the contract and consequently damages. Based on the brief highlights afore-discussed, the paper then explores the justifications for the process of identification as well as construction of the terms of a contract.

Justifications for the process of identification and construction of the terms of a contract

Several people in different sectors some times view contract as unnecessary. Once parties have engaged themselves especially for a long period without the so-called contract, any arrangement to enter into a formal contract becomes vulnerable (Johnston 2006, p. 859). For instance, Brogden having supplied coal and coke to the defendant for several years decided on commitments and agreements, which never lasted. Brogden and the defendant had discussed and reached a conclusion where their representatives were to deliberate on the issue further and make the final recommendation (Mehmet et al 2008, p. 21). The representative from both sides met, agreed on the quantity, quality and the prices of the coal and coke. The railway Company sent the drafted document to Brogden who on receiving altered the words and requested the arbitrator to sign the document on his behalf. It may appear, however, that the defendant had no deleterious intentions for keeping the returned document unsigned (Austen 2009, p. 60). Since the document was still a draft, he wanted a more formal document to be prepared in duplicate for execution. In view of the fact that the mutual relationship and trade continued after all the arrangements, it is evident that the parties had entered into an agreement in contemplating for a formal contract (Mehmet at al. 2008, p. 27). Therefore, the decision by the house of the lord was in deed within the terms and conditions presented in the contract document.

Furthermore, by Brogden supplying the coal and coke and even accepting the payment indicates that he had accepted the offer. Although, the defendant-Railway Company did not sign the document and was still able to offer payment for the goods received, clearly identifies the existence of acceptance by both parties (Chaplin 2010, p. 98). It appears unclear as to why Brogden had to alter the words in the document as agreed on by their experts and nominating the arbitrator to sign on his behalf especially in the absence of any representative from the defendant (Johnston 2006, p. 864). In my view, this was itself a breach of contract. It, therefore, confirms that he accepted the document as per the changes he made. Traditionally accepting to supply and buy shows a lot of commitment between the parties involved. Therefore, his case does not hold any water and only a game plan for outwitting individuals in the business setup. In addition, the terms of contract can be either verbal or written. It implies that the two parties were operating under the verbal and mutual commitments (Matthew 2008, p. 489). In fact, if there was no acceptance, then the Railway Company would not have suffered a sue case for having breached the contract. The contract bonded their decision during their trading process.

The basic effect of signing a document might not often results into honoring the terms. The most salient aspect is the agreement reached with consents of the parties. Otherwise, when the agreement is written, then it may likely be a term of the contract with or without legal repercussions (Matthew 2008, p. 467). The common rule binds the parties by all the terms and conditions presented in the contractual document whether or not they have read the terms or unstated them. It may result into several mistakes and false statements. This is contrary to accepting the offer by conduct as action shows more commitment than the general rule of writing. Therefore, supposing Brogden and the Railway Company, continued trading on old terms without the issue of formalizing the contract then the problem could have or could not have risen (Mehmet et al. 2008, p. 31). Railway Company could have suffered a sue case if the same problem occurred before the written agreement suggesting that there was some acceptance of offer by conduct. Logically, putting something into writing, not only assists in remembering, but also provides evidence. It is not necessarily true that every party will implement whatsoever appears in the papers. The two parties enjoyed the relationship based on the whole incident showing that they have accepted the terms of contract (Matthew 2008, p. 490). They entered into both expressed and implied terms during negotiation-written in a contractual document and provision of the contract respectively. This was pure collateral contract.

Every consumer has his or her right to accept and buy and/or reject and return a product. The fundamental meaning of a contract as an agreement among parties covers many issues, for instance, considering the life of an average consumer from his or her daily undertakings. He or she only tends to make decisions based on factors placed by contracts (Mehmet et al. 2008, p. 25). The case of the pharmaceutical society of Great Britain versus Boot Cash Chemists (Southern) Limited portrays the issue of customers selecting drugs from the shelves. Stipulated rights of consumers allow them to pick what they require from the shelves and transfer them to the registered pharmacists at the cash register (Maman 2008, p. 259). At this point, the contract does not bind the consumers. It exercises their rights. Therefore, they should have avoided the decision to sue the Boot Cash Chemist under the UK pharmacy poison Act of 1933, as they did not break the Act (Chaplin 2010, p. 76). By customers observing and selecting the displayed drugs, they had not entered into a contract with the Chemist. The registered pharmacist had the last say on drugs as he or she determines whether the customer should take the drug or not. Therefore, the customers were under strict supervision as the pharmacist and the customers had to agree on terms before the sales take place. In addition, a sense of sight is hugely valuable for any human being (Matthew 2008, p. 457). By customers, checking the price marked on the goods on the shelves and deciding to pick the goods does not provide sufficient evidence of accepting the offer.

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As Chaplin (2010, p. 83) points out, “the display of goods on shelves with price marked is simply an invitation to treat”. It does not necessarily imply that customers will accept the offer. Accepting the offer occurs on condition that the pharmacist has allowed customers to carry the drugs. A customer can select goods from the shelves as par the marked price, but the pharmacist may fail to grant them the opportunity to take the drugs. By customers just checking and carrying goods, they have neither written, verbal, nor even a promise. Therefore, they are not receiving any offer (Johnston 2006, p. 873). The contract of sale only exists after making the payment. Supposing the pharmacist was selling the drugs over the counter without customers having to confirm the prices, it could have resulted into the same process (Austen 2009, p. 67). This justifies that there is no contract between customers and the goods because contract cannot exist between customers and goods. It occurs between customers and the pharmacist on condition that the pharmacist has received the payment given to him/her by the buyer and has recorded it into a cash register (Mehmet et al. 2008, p. 34). This is when a formal agreement between the customer and the chemist exist.

The decision by the Boots cash chemist recognizes commercial reality and practicality. To decide otherwise would have resulted into an almost unworkable situation from customers who, for instance, picked commodities from the shelves and later thought otherwise to replace them. If the commodities on the shelves were tenders, then removing them from this location would constitute an acceptance. Returning them could amount to breach of contract. Therefore, “goods on display in a shop window qualify as an invitation to treat” (Maman 2008, p. 261). The nature of drugs does not exempt them from the class of goods. Displaying the drugs on the shelves with the prices marked was only a means of attracting customers to mach the competitors (Matthew 2008, p. 470). For this reason, a customer who takes goods from shelves and then puts them back in favor of another item is free to do so without any force from another person. A shop that displays items in its window but runs out of stock does not sell the displayed items (Chaplin 2010, p. 79). However, not every self- service situations qualifies as an invitation to treat. For example, the petrol pumps showing the price at a self-serve petrol station illustrate an invitation to treat because it may appear difficult for the motorist to give the fuel back on condition that the owner refuses to accept the offer of payment for the fuel. Moreover, automatic vending machines are not an invitation to treat.

An invitation to treat also exists in the field of advertisement where goods or services are advertised either in newspapers or on radio, television or Internet. For the case of Partridge versus Crittenden in 1968, the advertisement of ‘live wild birds for sale’ in the newspaper was not an offer. As Mathew confirms, “the advertisement was only an invitation to treat because there was no binding indication of an expression of intention” (2008, p. 483). Therefore, dismissing the case was justified. While people regard advertisements as invitations to treat, it is always possible for the advertiser to show clearly that they are doing so under the law. Therefore, any advertisement that people consider as an offer should show the commitment, guarantee and sincerity of the advertiser. Suppose they considered all the advertisements offers, then the businesses could be bound to task of commitments to the cost of legality. According to sale of goods Act 1979, any person has the legal right to sell the goods. If he or she were selling the goods by description on the newspaper advert, then the real goods would correspond to the description (Chaplin 2010, p. 81).

A contract should not include or state something that is remarkably open and obvious. For instance if one party agrees to pay a second party £50 for a bicycle, it becomes so obvious for the parties that they see no need of putting it down. The statement qualifies as a term. However, any agreement without statement is less likely to be a term. In the case of Cohen and Roche, Cohen consciously went to an auction conducted by Roche and even successfully bid for eight antique chairs. Clearly, Cohen had accepted the terms of purchase. Therefore, he had the obligation to do and act as per the agreement (Matthew 2008, p. 491). Realistically, signs do not make sense especially if not reinforced with the names and address. Roche’s act of pasting his name and address on the book indicates a reaching of agreement. Otherwise, Roche could have proceeded with the auctioning. He was acting as an agent to the buyer but not the seller (Mehmet et al. 2008, p. 23). Although, the law requires that the signature of party’s agent should be used in the absence of memorandum, the entries made by Roche in the book recognize his name as the signature. The name represented the purpose served by the sign in the case. Therefore, contract existed between the parties. Cohen breached the contract.

The context of Roche had a breach of contract. Legally, a binding factor however, failed because Roche did not live to the terms. He acted as an agent to the buyer because even with the law of his signature, the catalogue proved it (Maman 2008, p. 257). The fall of the hammer of an auction stipulates that the sale was complete at the highest bidder’s quote, which Cohen had placed. The books prove that Roche was in deed the agent to the buyer because the auction law binds the sale agreement “at the fall of the hammer to the highest bidder, Cohen at the stipulated price” (Chaplin 2010, p. 92). Roche could have only had the right to breach the contract in case of in uncertainty, which is one way of it rather than increasing the auction price on Cohen who had already won the bid. Status is quite critical, as a person can only take an authorized step to obey a term, as opposed to mere flattery. Lawfully speaking, affirmations only give rise to contractual duties (Matthew 2008, p. 472). A court may consider various factors in establishing the affirmation. In particular, the vitality given to the affirmation by the people, as they sign the contract is quite substantial.


Several individuals live their lives and doing what they want with little regard for contractual law. However, the reality is that contracts bind the decisions that people make on a regular basis (Maman 2008, p. 265). It helps the law know the statement to rule in favor of incase of need. Usually one party prepares several statements to induce the party into a contract. However, disagreement arises because the statements made serve as an integral part of the terms of contract (Austen 2009, p. 64). Such statements should be taken as merely pre-contract catalogue and not a part of the term of the contract. Moreover, the parties to a contract should be bound only by its terms but not by any secondary statements made by one party.

However, a term, which has not been stated by all the parties, is often not included in the contract because it does not change the commercial sense of the contract. The breaches of contract often take legal measures (Johnston 2006, p. 881). Therefore, the courts examine the evidences presented by both parties by ensuring that the statements are in deed part of the contract terms and conditions. Otherwise, if the statement takes a frightfully long time before reaching the final agreement, then it may not qualify as one among the terms of the contract.

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Austen, B., 2009. Implied terms in English contract law: the long voyage of the Moorcock. Common Law World Review, 38(1), pp. 56-80.

Chaplin, M., 2010. Resolving the principal place of business conundrum: adopting a Single test for federal diversity jurisdiction. Review of Litigation, 30(1), pp. 75-99.

Johnston, J., 2006. The return of bargain: an economic theory of how standard-form Contracts enable cooperative negotiation between businesses and consumers. Michigan Law Review, 104(5), pp. 857-898.

Maman, D., 2008. The clash between legal and business logic: business groups in the New Israeli corporate law. International Review of Sociology, 18(2), pp. 253-266.

Matthew, M., 2008. A not intractable problem: reasonable certainty, tractable, and the Problem of damages for anticipatory breach of a long-term contract in a thin Market. Columbia Law Review, 108(2), pp. 452-493.

Mehmet, K., et al., 2008. The business law education of accounting students in the USA: the accounting chairperson’s perspective. Accounting Education, 17(1), pp. 17-36.

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