Answer the following questions. 1. Discuss the elements necessary for an effecti

Question

Answer the following questions.

1. Discuss the elements necessary for an effective offer?  Detail each element.

2. What distinguishes a bilateral contract from a unilateral contract? Give a fact pattern for each.

3. How do capacity and legality play a role in contract law? Cite an example for each and explain how a court would approach deciding a case where capacity and a case where legality was at issue.

4. What are the rules used by Courts regarding the interpretation of contract terms? In other words, if the parties to a lawsuit are debating about what parts of a contract mean or say, how can the court come to a decision and decide how to interpret that?  

5. With is the difference between a unilateral mistake and a mutual mistake? When could a unilateral mistake result in a contract being voidable? Explain.

Explanation / Answer

1. The following are the necessary elements:-

a) The terms should be definite- The terms of the offer should be clearly defined. The due date of acceptance should be clearly mentioned. The price of the offer should be unambiguous.

b) Commitment on the part of the person making the offer- It should be clearly stated that this is the final offer and there should not be any doubt in the mind of anyone about the commitment.

c) Clear communication- The offer should be communicated and should be very specific.

2. A unilateral contract is the one in which only one party makes the promise. It is open to all. e.g. giving a reward to find one's missing bike. A bilateral contract requires two parties to get into an agreement on some specific things. A contract between a landlord and tenant.

3. Capacity means the ability to get into a contract. The person entering into a contract must be a mature adult, free of any mental illness and not under the influence of any drugs or alcohol.

By legality, it is meant that the object of the contract should be legal and not against public policy. It should not be in violation of law either.

In case of capacity, the court would approach the case by first establishing the capacity of the signee to the contract. If the signee's capacity is in doubt, then his/her case would be void.

In case of legality, if the object of the case is illegal i.e. it is against public policy or in violation of the law, the case will be decided against the person/entity making the contract.

4. The intention of both the parties is looked at while deciding. The court won't look outside what is written in the contract for its decision. Court also looks at precedents.

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