Contract law Essay Example | Topics and Well Written Essays - 1500 words - 1

Contract law - Essay Example In the formation f contracts two elements are vital. Firstly, the "offer," an indication by one person prepared to contract with another, on certain terms, which are fixed, or capable f being fixed at the time the offer is made. Secondly, there must be an "acceptance", an unconditional assent to a definite offer.[2] These two combine to create certainty that a contract has been formed, for, as in Scammell v Ouston (1941),[3] "if an agreement is uncertain on some important issue.the courts will hold there is no contract."[4] Following this, the elements f consideration and intent provide the contract's "body and substance"[5]So, what is meant by "consideration" and "the intention to create legal relations" English law usually requires prof that the parties have made a bargain, or agreement, [6] this is known as the benefit and detriment test. (Currie v Misa (1875) [7] or "a benefit to one party or a detriment to another."[8] So, in practical terms consideration can be defined as what one party in an agreement is giving, or promising, in exchange for what is being given, or promised, by the other side. [9] This provides mutuality, making the contract enforceable. The Oxford Dictionary f Law definition states, "Consideration is essential to the validity f any contract other than one made by deed. Without consideration an agreement not made by deed is not binding; it is a nudum pactum (naked agreement) governed by the maxim ex nudo pacto non oritur action (a right f action does not arise out f a naked agreement.)"[10] English law does not rely on formalities as a way f identifying intention to create a legally binding contract. Instead it focuses on offer, acceptance and consideration. [11] If these are present, and unless rebutted by contrary evidence, courts operate on the basis f two legal presumptions, that there is no intention to be bound in domestic or social arrangements, but there is intention to be bound in commercial agreements. [12] Professor B.A.Hepple claims that there is no need f a separate requirement f intention, and that a bargain, involving mutuality is sufficient. These views are not generally accepted as it is widely agreed that identifying the parties' intentions is essential to the role f the courts when establishing if a contract was made. [13] It is useful to look at why English law has become so reliant on the consideration element f a contract, and why it has frequently been used as the "badge f enforceability,"[14] Professor Atiyah argues that "consideration" originally meant a "reason for enforcing an agreement."[15] Early forms f contract law mainly involved agreements regarding debt, covenant, or detinue ie., wrongful detention f property, and were only binding if under seal. This method, which required a degree f form such as writing or a deed, was used to prevent fraud and proved that there was an intention to create legal relations. Consideration was first used in the sixteenth century when, in order to enforce informal agreements, the law f assumsit was developed.[16] So, while that the law would, "...still not enforce merely gratuitous promises, ... the law had to develop an element that could distinguish between a proper contractual agreement, and something less that would not."[17] Due to the Law f Property Miscellaneous Provisions Act 1989, form is still required for contracts involving the sale f land. It is also used to offer consumers protection in hire purchase and consumer credit agreements. In the English Common law system, a promise is not legally binding as part f a contract except if it is made in a deed or supported by some consideration. [18] Sir Guenter Treitel Q.C.,