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Formation[ edit ] At common law, the elements of a contract are offer, acceptance, intention to create legal relations, and consideration. Not all agreements are necessarily contractual, as the parties generally must be deemed to have an intention to be legally bound. A so-called gentlemen's agreement is one which is not intended to be legally enforceable, and "binding in honour only".
Offer and acceptance and Meeting of the minds In order for a contract to be formed, the parties must reach mutual assent also called a meeting of the minds. This is typically reached through offer and an acceptance which does not vary the offer's terms, which is known as the " mirror image rule ".
An offer is a definite statement of the offeror's willingness to be bound should certain conditions be met. As a court cannot read minds, the intent of the parties is interpreted objectively from the perspective of a reasonable person as determined in the early English case of Smith v Hughes .
It is important to note that where an offer specifies a particular mode of acceptance, only an acceptance communicated via that method will be valid. A bilateral contract is an agreement in which each of the parties to the contract makes a promise  or set of promises to each other.
These common contracts take place in the daily flow of commerce transactions, and in cases with sophisticated or expensive precedent requirements, which are requirements that must be met for the contract to be fulfilled. Less common are unilateral contracts in which one party makes a promise, but the other side does not promise anything.
In these cases, those accepting the offer are not required to communicate their acceptance to the offeror. In a reward contract, for example, a person who has lost a dog could promise a reward if the dog is found, through publication or orally.
The payment could be additionally conditioned on the dog being returned alive. Those who learn of the reward are not required to search for the dog, but if someone finds the dog and delivers it, the promisor is required to pay.
In the similar case of advertisements of deals or bargains, a general rule is that these are not contractual offers but merely an "invitation to treat" or bargainbut the applicability of this rule is disputed and contains various exceptions. A contract is implied in fact if the circumstances imply that parties have reached an agreement even though they have not done so expressly.
For example, John Smith, a former lawyer may implicitly enter a contract by visiting a doctor and being examined; if the patient refuses to pay after being examined, the patient has breached a contract implied in fact.
A contract which is implied in law is also called a quasi-contractbecause it is not in fact a contract; rather, it is a means for the courts to remedy situations in which one party would be unjustly enriched were he or she not required to compensate the other. Quantum meruit claims are an example.
Invitation to treat[ edit ] Main article: Invitation to treat Where something is advertised in a newspaper or on a poster, this will not normally constitute an offer but will instead be an invitation to treatan indication that one or both parties are prepared to negotiate a deal.
Carbolic, a medical firm, advertised a smoke ball marketed as a wonder drug that would, according to the instructions, protect users from catching the flu. When sued, Carbolic argued the advert was not to be taken as a serious, legally binding offer ; instead it was "a mere puff", or gimmick.
But the court of appeal held that it would appear to a reasonable man that Carbolic had made a serious offer, and determined that the reward was a contractual promise.
Although an invitation to treat cannot be accepted, it should not be ignored, for it may nevertheless affect the offer. For instance, where an offer is made in response to an invitation to treat, the offer may incorporate the terms of the invitation to treat unless the offer expressly incorporates different terms.
If, as in the Boots case,  the offer is made by an action without any negotiations such as presenting goods to a cashierthe offer will be presumed to be on the terms of the invitation to treat. Auctions are governed by the Sale of Goods Act as amendedwhere section 57 2 provides: Electronic contracts[ edit ] Entry into contracts online has become common.
Many jurisdictions have passed e-signature laws that have made the electronic contract and signature as legally valid as a paper contract.
In India, E-contracts are governed by the Indian Contract Actaccording to which certain conditions need to be fulfilled while formulating a valid contact. Certain sections in information Technology Act also provide for validity of online contract.
Intention to be legally bound In commercial agreements it is presumed that parties intend to be legally bound unless the parties expressly state the opposite as in a heads of agreement document. In contrast, domestic and social agreements such as those between children and parents are typically unenforceable on the basis of public policy.
For example, in the English case Balfour v.
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A contract is a promise or set of promises that are legally enforceable and, if violated, allow the injured party access to legal remedies. Contract law recognises and governs the rights and duties arising from agreements.
In the Anglo-American common law, formation of a contract generally requires an offer, acceptance, consideration, and a mutual intent to be bound.
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