Consideration is another essential element which makes the agreement binding. Only in special contract like deeds do not need any consideration. In this element, the offeror will give something in exchange for the promise which also part of the bargain and it must be real and tangible with actual value: White v Bluett (1853) and need not to be adequate: Thomas v Thomas (1842) (Fried 2015; Turner 2014). In most cases, consideration in return for a promise will constitute both benefit and detriment to both parties. There are certain scenarios where the promise does not constitute a valid consideration. A promise for love or any affection or to maintain relationship does not give a valid consideration as well as a gift with condition required.
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INTENTION TO CREATE LEGAL RELATIONS
Third essential requirement in a contract is the intention to create legal relations. In order for a contract to be binding, legal and enforceable, both parties involved must manifest an intention to create legal relations (Chin 2014; Stone 2009). Intention to create legal relations shows that the parties are ready to accept consequences of being into an agreement. Cases such as domestic and social transactions, evidence must be secured to prove the presence of legal intention among the parties (Parker & Box 2013). The court may verify the intention by having objective trial process.
Though there are many cases where agreement leads to binding and enforceable in courts, certain scenario may develop an agreement but not intended to be legal. The law differentiates social and domestic agreements like for example arrangement between member of the families: Balfour v Balfour (1919); and government agreements: Scammell v Ouston (1941)(Owens & Owens 2001).
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CAPACITY
After the contract has been made where offer and acceptance has been present, the intention to create legal intention and consideration were sufficient, the next thing to look for is whether the person or party involved has a relevant capacity to enter into an agreement.
Formation of contract considers capacity of a person to understand the nature and consequences of agreement. According to Chew (2014), there are three kinds of capacity, minors, mental capacity and intoxication. First in list is a minor or a person whose age is under 18. They are restricted and cannot enter into a contract unless otherwise it is necessities. Another listed is the person who is mentally incapacitated or those who are mentally ill and cannot understand what was written or what the contract is all about. Last in the list is the person who is under the influence of alcohol or liquor or any kinds of drugs. Mentally disorder and Intoxicated persons cannot enter into a contract for it will cause nullity and void unless otherwise they prove that they are really disabled and it was known by the other party involve in the contract (Fisher & Greenwood
INTENTION TO CREATE LEGAL RELATIONS
Third essential requirement in a contract is the intention to create legal relations. In order for a contract to be binding, legal and enforceable, both parties involved must manifest an intention to create legal relations (Chin 2014; Stone 2009). Intention to create legal relations shows that the parties are ready to accept consequences of being into an agreement. Cases such as domestic and social transactions, evidence must be secured to prove the presence of legal intention among the parties (Parker & Box 2013). The court may verify the intention by having objective trial process.
Though there are many cases where agreement leads to binding and enforceable in courts, certain scenario may develop an agreement but not intended to be legal. The law differentiates social and domestic agreements like for example arrangement between member of the families: Balfour v Balfour (1919); and government agreements: Scammell v Ouston (1941)(Owens & Owens 2001).
4. …show more content…
CAPACITY
After the contract has been made where offer and acceptance has been present, the intention to create legal intention and consideration were sufficient, the next thing to look for is whether the person or party involved has a relevant capacity to enter into an agreement.
Formation of contract considers capacity of a person to understand the nature and consequences of agreement. According to Chew (2014), there are three kinds of capacity, minors, mental capacity and intoxication. First in list is a minor or a person whose age is under 18. They are restricted and cannot enter into a contract unless otherwise it is necessities. Another listed is the person who is mentally incapacitated or those who are mentally ill and cannot understand what was written or what the contract is all about. Last in the list is the person who is under the influence of alcohol or liquor or any kinds of drugs. Mentally disorder and Intoxicated persons cannot enter into a contract for it will cause nullity and void unless otherwise they prove that they are really disabled and it was known by the other party involve in the contract (Fisher & Greenwood