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Elements of a Contract: Commercial Law for Employees

There are five salient elements of a contract. The elements are a requisite for a contract to be enforced. Failure to prove any of the elements renders the contract voidable, thus it cannot be enforced. Acceptance is one of the elements that validate a contract. Secondly, consensus ad idem is required to make a contract valid. The other two elements are offer and consideration. Finally, there should be the intention to form legal relations to make a contract valid.

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To start with, offer means the party offering expressing their intention to be bound by the contract should the other party or parties accept. An offer should be clearly distinguished from an invitation to treat. An invitation to treat is a call for negotiations and no party is bound by the negotiations in an invitation to treat. The party offering should be ready to ensure that they are ready to perform the contract after acceptance.

The party accepting the offer may raise a legitimate action if it is clear that the party offering altered the conditions of the offer after acceptance. Secondly, the acceptance is a critical trait of a valid contract. Acceptance entails agreeing to assent to the offer proposed by the other party. It should be noted that the acceptance should be unequivocal. In a case where the party accepting introduces new conditions to the offer, a counter offer occurs with the effect of terminating the initial offer (Seaquist, 2012).

A counter offer occurs where the party or parties supposed to accept the initial offer introduce new conditions that were not part of the initial offer. For acceptance to have been in the contract, it should be assented to without any form of alterations. Thirdly, a valid contract should have consideration. Consideration is defined as something of economic value, a forbearance, detriment, or benefit to a party. It ought not to be of monetary value, but the guiding principle is that it is of economic value. Anything used as consideration but does not have any economic value is not considered part of consideration.

The consideration should not be past, but the law allows it to be executory or executed. If the consideration is past, then the party relying on it cannot enforce it. If the contract is not paid, then one party becomes a volunteer. A volunteer does not get rights in the law of contract. The existence of consideration kick starts the performance part of the contract. A party cannot seek the performance of the contract if they did not offer consideration (Seaquist, 2012).

Thirdly, a valid contract requires consensus ad idem. This means that the parties in the contract have voluntarily come together. The coming together of the parties in this case is critical in ensuring that they do not claim the existence of misrepresentation. A contract without the consensus ad idem of the parties is an unenforceable. The critical question to be answered is whether the parties understood what they were contracting on. Fourthly, the intentions to create legal relations should be manifest in the contract. An illegal contract is void at law, thus parties can only enter into legal relationships. A legal contractual relationship is enforceable. The fact that the contract is not legal means that it cannot be enforced (Ewan, 2005).

The case under study shows that the contract falls in the category of employment contracts. Consequently, the common law and the Uniform Commercial Code (UCC) are the applicable laws. The principles that govern contract law are both in principles that have been laid out in statutes, as well the applicable principles of common law. The principles of common law complement the Uniform Commercial Code. The fact that the statute law is not adequate means that the principles of common law should be applied in a complimentary manner. The contract cannot be interpreted using the principles of common law only.

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The legislative statute should be used to ensure that the terms in the contract are interpreted in a manner that favors the parties in the contract. The contract given is an example of a contract of restraint of trade. Such contracts are designed to ensure that the employees of a given business are prevented from using the secrets of the employers to benefit the competitors. The contract is supposed to restrict an employee in a reasonable way (Seaquist, 2012).

There are cases where the courts of law will not enforce a contract of restraint of trade. Some of the said cases are judged according to the agreement of the parties. The restraint of trade should not be used to deny the employee a chance to exercise the freedom of contract. The freedom of contract dictates that the employee should be given an opportunity to decide the nature of contract with the new employee.

The law allows the restriction to ensure that the employee does not trade the secrets of the former employer. However, the restriction should be of a reasonable level. The employer is not free to impose unreasonable restrictions to the former employee. The surrounding circumstances of each case are considered where the court is put at a task of determining whether a given restraint is lawful or unlawful. The restraints should not be designed to subject the employee to undue hardship (Bernstein, 2008).


Bernstein, D.E. (2008). Freedom of contract. George Mason Law & Economics Research Paper No. 08-51.

Ewan, M. (2005). Contract law – Text, cases and materials. Oxford, UK: Oxford University Press.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

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