In this Assignment I am going to describe the requirements of a valid contract and also describe how statutes affect contractual terms.

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Omobolanle Salami                30/03/2011

Assignment No.1        Unit 21

BTEC National Diploma in Business

Aspect of Contract and Business Law


In this Assignment I am going to describe the requirements of a valid contract and also describe how statutes affect contractual terms.

Task 1.1 (p1)

In this first task I will be explaining the requirements to create a valid contract and I will also point out the differences between an offer and an invitation to treat.

A contract is an oral or written agreement between people. A contract is made in order to know your rights so that you cannot breach it, which means a contract binds the parties together so that no one can breach the agreement in future. A contract is an agreement between two or more parties who intend to be bounded by law.

A valid contract has to consist the following:

  • A valid offer
  • A valid Acceptance
  • A valid Consideration
  • Intention
  • Capacity
  • Legality


This is the first stage of a contract, this is when the offeror the person who makes the offer, states an interest to enter an agreement, if the offer that the offeror sets is accepted by the other party (the offeree). An offer is a proposal, promise or other manifestation of willingness to make and fulfil a contract. However and offer from the offeror could also be terminated if the offeree does not accept the terms of the agreement. There are certain rules relating to what a valid offer is one of those is that the offer must contain all of the terms of the proposal contract so that the offeree (the person to whom an offer is made) can make an conditional acceptance.


After the offer has been made to the offeree, the offeree will now have to decide if he is going to accept the offer or not. It is important for a offer to be unconditionally accepted, because without a valid acceptance a contract cannot be made. An acceptance must be communicated to the offeror. The explanation to this is the “postal rule” where acceptance is made by letter.


A contract cannot take place without good consideration. This is what the two parties are exchanging, it is what is being passed between the parties, in other words it could be referred to as the price of which the promise (of the offer) is purchased. This good consideration is what makes a contract a valid contract because without consideration the contract would not be valid. This means that both parties to the contract must provide consideration. It can be executed or executor.

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When a person is considering entering a contract, he must intend to be bound by it. This ensures that people who enter a contract, but never intend to be legally bound by them are not trapped in a contract arrangement. All parties must have the intention that the agreement will be legally binding. The law divides agreements into two groups, social and domestic agreements and business agreements.


This is the legal ability for someone to enter into a contract. It is illegal for someone below the age of 18 to enter certain contracts. If someone below ...

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3 stars, A good essay for the law and business module. More detail on key principles, and case law, would improve the grade.