Introduction
Common law dictates that contracts must fulfill six elements to be enforceable. These elements are offer, acceptance, intentions to foster legal relations, authority and capacity to enter into a contractual agreement, consideration, and certainty (O’Sullivan, 2020). Therefore, this paper hypothesizes that the components of an enforceable contract are essential to establishing a binding agreement between the parties.
Offer
Making an offer is the first stage of any contractual agreement. An offer is a proposal from the initiating party to the other, indicating the terms offered. In the offer, the goods or services to be exchanged are stated along with the engagement guidelines (Poole et al., 2021). An offer clearly states the charges, mode of payment for the commodity, and how different scenarios will be handled if the second party accepts the offer. Common law stipulates that offers must be unambiguous. For a binding contract, the party receiving the offer must first accept it.
Acceptance
After one party makes an offer to the other, both parties engage in negotiations that may adjust the contract terms. Once the parties consent to the contract, they accept the offer. Common law allows contractual parties to express or imply acceptance of a contract (Stone & Devenney, 2022). Implied acceptance refers to an action that aligns with acceptance of the offer. For example, if a supplier requests the payment channel in business contracts or arranges the supply of materials, this implies acceptance of the offer. Expressed acceptance is often a written confirmation that the offeree agrees with the offer (Jones 2017). The engagement between an offer and acceptance may be complicated, especially where the offeree issues a counteroffer. The parties to the contract must be keen to understand all the terms before reaching the acceptance stage.
Consideration
All contracts between parties must have consideration. Considerations are the exchanges once the contract is signed and sealed. In an employment contract, the employer’s consideration is the job, while the employee’s consideration is the services they will provide to the employer (O’Sullivan, 2020). Besides the quantifiable items of exchange, contracts have unspoken and unquantifiable considerations. This could limit the exercise of one’s rights in the contract framework. Making a binding and enforceable contract allows negotiations for reasonable considerations among all parties to the contract.
Intention to Create Legal Relation
The parties to a contract must be willing to be bound by it. Intention is demonstrated through written consent, using phrases such as ‘I agree’ or ‘I confirm,’ to indicate that they intend to observe the contract and bear its consequences (Poole et al., 2021). Intention in legal relations is crucial in contracts, and parties seek to ensure that each party agrees to the conditions set out in a contract. For example, commercial contracts between a client and their bank may require the client to tick each condition before signing at the bottom of the contract. Often, this is to ensure that the contract parties have read and understood each term and condition and intend to abide by the legal requirements. In such a case, the contract is accepted if the party fails to agree to one of the listed terms.
Authority and Capacity
The parties to a contract must have the capacity and authority to consent to it. A party can only sign for another if authorized to act on behalf of the signatory (Jones 2017). Regarding capacity, parties must have the intellectual and legal capacity to enter into a contract. Intellectual capacity means the party can read and understand the contract terms (Stone & Devenney, 2022). Therefore, the party must be able to make a sound decision regarding the contract to ensure it meets the legal standards for enforceability.
Certainty
Certainty, as an element of a contract, stipulates that the terms and language used in the agreement must be clear. All details regarding payment terms, models, time frames, and other factors must be specified to create certainty about any eventualities that may arise during the period the contract is valid (Stone & Devenney, 2022). The price must also be stated with certainty, including the amount, the specific currency, and payment plans. For a contract to be enforceable, it must be clear, and all parties must be aware of the terms involved to avoid uncertainty.
Conclusion
In summary, the above components are applied in the formulation of enforceable contracts under the common law. Their absence from any contract means that the contract does not meet the legal requirements for enforcement. Thus, these elements are critical in analyzing whether a contract can be enforced in court.
References
Jones L. (2017). Introduction to business law (4th ed.). Oxford University Press.
O’Sullivan, J. (2020). O’Sullivan and Hilliard’s The Law of Contract. Core Texts Series.
Poole, J., Devenney, J., & Shaw-Mellors, A. (2021). Contract law concentrate: Law revision and study guide. Oxford University Press.
Stone, R., & Devenney, J. (2022). The modern law of contract. Routledge.