Unit 1 Resolving Conflict in the Marketplace

Question 1

What is a contract?

Answer 1

A legally binding agreement between two or more parties, which is enforceable by law.

Question 2

What are the elements of a valid contract?

Answer 2

1. offer
2. acceptance
3. intention to contract
4. capacity to contract
5. consent to contract
6. consideration
7. legality of purpose
8. legality of form

Question 3

Define an offer in a contract

Answer 3

An offer is made when one person asks another to enter a deal.
The offer can be made orally, in writing or by conduct.

An offer can expire
- If it is rejected
- If it is withdrawn before it can be accepted
- If it is not accepted within a specified time frame
- If either party dies before it is accepted

Question 4

Define acceptance

Answer 4

the person receiving the offer accepts all terms of the offer orally, in writing or by conduct.

Question 5

define intention to contract

Answer 5

both parties must be aware that they are entering into a legally binding agreement that could see them in court if they fail to keep their side of the agreement

Question 6

what is capacity to contract

Answer 6

all people and businesses have the legal ability to enter into a contract except for :
- any person under the age of 18, except for necessities
- people who are mentally incapacitated

Question 7

what is consent to contract

Answer 7

th parties entering into a contract must do so voluntarily.
A contract is invalid if :
- a party is put under physical pressure or threatened to enter into a contract
- a genuine mistake is made by either party of the contract
- either the party is dishonest and gives false information that may encourage the other party to enter into the contract

Question 8

define consideration

Answer 8

Consideration means that each party in the contract must give something of value to the other party.
Consideration can refer to money or goods exchanged.

Question 9

define legality of purpose

Answer 9

a legally binding contract must be created for a legal purpose.

Question 10

define legality of form

Answer 10

Contracts must be drawn up in the correct legal format. This can be done orally, in writing or by conduct.