Discuss the six basic elements needed for the formation of a valid binding agreement in the light of contract act 1950 and relevant decided cases.
The six basic elements needed for the formation of a valid binding agreement in the light of contract act 1950 and relevant decided cases is offer, acceptance, consideration, capacity and certainty. I would like to discuss the six basic elements.
The first elements is offer, an offer is defined as” an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person whom it is addressed”, the offeree . The expression referred to in the meaning may take different from such as a letter, newspaper, fax, and email and even behavior, as long as it communicates the basis on which the offeror is prepared to contract. Whether two parties have an agreement or a valid offer is an issue which is determined by the court using the objective test. Therefore the intention meaning is objectively judged by the courts. In the case of smith v.huhges(1871), the court emphasized that the important thing is not a party real intertion but how a reasonable person would view the situation. This is due mainly to common sense as each party would not wish to break his side of the contract if it would make him or her in the wrong to damages. It would especially be different to the law of certainly and precision in commercial contract and the topic of mistake and how it affects the contract.