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Q 1. Describe the four basic elements of a contract.

July 14, 2012 By: Meliza Category: 1st SEM

Contract is a binding agreement between two or more parties. Once signed, this agreement can be enforced by either a court of law or binding arbitration. Because legal contracts cannot be signed under duress, there is the “mirror image” standard of binding agreement. This simply means that each party must be as willing to sign the agreement as the other. The concept of “breach of contract” is recognized by state and federal laws and is a valid reason for litigation.

Mutual Consent

To enter into a binding contract, there must be mutual consent and understanding between the parties. This means there must be a certain amount of conceptualization about the contract’s terms. This is why legal contracts are so long and filled with what people refer to as “lawyer-speak.” All the fine print is putting into words the concepts of the contract so there is no wiggle room for interpretation.

Agreement

This is known as the “offer and acceptance” element of the contract. It is just as it sounds. One party will make an offer, and the other party will accept the offer. This is what makes a contract take shape. If one party makes an offer and the other party makes a counteroffer, an agreement has not been made. This is usually seen as a rejection of the offer. If the counteroffer is rejected, the original offer does not necessarily stand anymore.

Exchange

This is one of the very basic elements of a contract. Each of the parties must bring to the table some form of product, service or legal tender to have a mutual exchange. This means that a contract can involve any of these exchanges. Employment contracts involve a business exchanging a salary and benefits for the work services of a new employee. Sales contracts involve the exchange of goods for the promise of payment from a customer. In most cases, contracts are only enforceable after one of the parties has fulfilled his share of the exchange. For instance, the new employee mentioned above would have a difficult time suing his employer for not paying him if he failed to show up for work.

No Public Policy Violation

Even if a contract meets all other necessary elements, violating public policy will automatically invalidate it. For instance, if prostitution is against the law in a certain city, a contract in which a woman agrees to sleep with a man for a specified amount of money would be invalidated because it violates public policy. This means that the terms of the contract would be unenforceable in a court of law.

At least two separate parties entering into an agreement. The agreement can be between two individuals, between an individual and a company or between a company and another company.

The parties are qualified to agree to the terms and conditions in the contract. The parties must be of legal age and have full understanding of what the contract is and the details it outlines.

Both parties are receiving consideration, or value, from the agreement. This is most commonly money in exchange for a good or service, but there are other methods of consideration, especially in the business arena.

The contract is created for legal activities. Contracts are not binding or considered legally valid when they propose illegal activities or violate existing laws in any way.

Breach Of Contract
A party who has agreed to a valid contract can be held in breach of that agreement in a court of law. When one party seeks legal recourse against another for breach of contract, that party must re-evaluate the contract based on the four elements. These elements are essential in showing that one party did not live up to his end of a valid contract. The plaintiff must prove that:

The contract was valid. In court, the plaintiff will attempt to prove that all the elements that went into making the contract met the validity requirements.

One party did perform according to the contract. The plaintiff must show that the other party did not complete the contract, while proving that the plaintiff did abide by the contract.

The other party failed to perform according to the contract agreement. The plaintiff will have to show that the other party failed to meet the basic contractual obligations.

Damage was incurred. The plaintiff must show that damage occurred as a result of the other party’s breach of contract. This could mean loss of money, assets or other quantifiable items.

 

 

Q 2. Describe the characteristics and legal issues of Lump-Sum Turn Key type (LSTK) contract

 

Q 3. Write short note on the following bidding methods:

 

  1. International/Global Competitive Bidding (ICB).

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