Essay on Contract Formation



Essay on Contract Formation

Contracts play an essential role in business as they increase practicability and expedience of businesses. A contract can either be a written contract or an oral contract. Regardless, there are certain essential elements of a contract such as capacity, offer, acceptance, consideration and the intention to create legal relations. When determining whether a contract existed between Mowgli and Kipling these essential elements of a contact have to be established. Oral contracts do not require the terms of the contract to be in written form. However, such contracts are harder to enforce. Since there is no documented evidence of any offer or acceptance in oral contracts it is difficult to prove that the parties had intentions to be legally bound (Cavendish Publishing, 2004).

The first consideration that should be made is whether or not an offer was made. An offer can be described as a promise or a proposal made by one party to enter into a contract with a particular set of terms with the intention of being bound as soon as the person to whom the offer is made communicates their acceptance. An offer may be written, spoken or express or implied by conduct. However, there are certain elements that must be present for there to be a valid offer. An offer must also be distinguished from an invitation to treat. In Harvey v Facey, the court held that a request for supply of information will not amount to an offer (Harvey v Facey, 1893). If Kipling’s discussion with Mowgli during the rides was a mere request for the supply of information, then this will not amount to an offer. However, for there to be an offer, Mowgli should have implicitly or expressly acted to express a clear intention to be legally bound. One could infer that from the specific discussion that the nature of these discussion amounted to an offer because the parties expresses the intention to be legally bound (Elliot & Quinn Frances, 2009).Essay on Contract Formation

The second element that we need to consider is whether or not there was an acceptance of the offer made. If the discussions between Mowgli and Kipling amounted to an offer made by Mowgli to Kipling to buy the widgets, would it be proper to infer that the delivery of this widgets by Kipling amount to an acceptance on his part? One of the requirements for there to be a valid acceptance is that the person whom is supposed to accept the offer must be aware of the offer. In Tin v Hoffman, the court held that a party could not be bound as a result of offers that he was not aware of as the letters containing the offer had crossed at the post office (Tin V Hoffman, 1873). An acceptance is the final and unqualified expression of assent by words or conduct to the terms of the offer in the manner prescribed by the offeror (Oxford University Press, 2001). An acceptance must also be made within reasonable time. We could therefore infer that by delivering the goods Kipling accepted Mowgli’s offer to buy the goods at the specified price date and time.

For there to be a valid contract, there also needs to be consideration. Consideration can be described as some benefit or advantage that goes to one party or some loss or detriment to be suffered by one party. Consideration must also move from the promisee. In this case, Mowgli promised Kipling that he would buy the goods from Kipling at a specific price (Cavendish Publishing, 2004). Based on this promise, Kipling delivered the goods to Mowgli. The delivery of goods in this case amounted to sufficient consideration as this was a detriment to Kipling for the loss of possession in her goods. Similarly, there must be an intention to create to create legal relations. There is a presumption that in commercial agreements, the parties intend to create legal relations. We can therefore conclude that all the essential elements of a contract have been met. Nonetheless, the parties to this contract should have clearly expressed their intention to be bound in a written contract or clearly expressed their intentions.Essay on Contract Formation




Cavendish Publishing. (2004). Contract Law: Cavendish Lawcard Series. Portland: Cavendish Publishing.

Elliot, C., & Quinn Frances. (2009). Contract Law. Edinburgh: Pearson Education Limited.

Harvey v Facey, AC 552 (United Kingdom Judicial Commitee on the Privy Council 1893).

Oxford University Press. (2001). Oxford Dictionary of Law. Oxford: Oxford University Press.

Tin V Hoffman, 164 Md 431 (LT 1873).