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Report by Karen Harper (Trainee Company Secretary)


I have recently joined the company as a Trainee Secretary and as part of my induction I have been set a task to demonstrate my understanding of Contract Law. The Company Secretary has requested that I cover three areas:

. Discuss on what basis a contract is deemed to be valid.

2. Select at least three terms that could appear in a contract with an artiste and explain the significance to the company.

3. Assess the validity of two clauses included in an artistes contract.

This report has been presented in an informal format as it is hoped that it may prove useful at a later date to provide an insight into Contract law for those who are unfamiliar with this area. This idea was conceived whilst conducting research for this project, as most of writings on Contract Law are to say the least, a little heavy going with legal jargon and complex terms. Such text only disguises the true meaning of this area of Law and makes it even less comprehensible to those who have not studied or used it on a frequent basis.

I am to cover each of the areas individually by explaining they're meaning, and then giving a basic overview of each.

Discuss On What Basis A Contract Is Deemed To Be Valid

The Oxford Dictionary of law describes at Contract as " A legally binding agreement. Agreement arises as a result of offer and acceptance, but a number of other requirements must be satisfied for an agreement to be legally binding." Before we discuss what makes a contract valid let us first explore what a contract is and what it must contain.

A business will enter into contracts with all or any of the following, Lenders, Employees, Sellers of land or buildings, Suppliers of equipment, Suppliers of stock and / or Customers. A contract can be as simple as you walking into a shop and requesting to buy a bag of apples from the owner. This is a simple, informal contract, however within the world of business contracts can be a complex area and a great deal of attention must be taken when formulating a contract to ensure that all necessary areas have been covered. Not only the entering into and working of a contract but also we must consider the inevitability of a contract coming to an end or being legally binding from the outset. A contract can be deemed to be invalid (or void) if a mistake has been made and requirements have not been met. When a contract is declared invalid all parties involved must return (if possible) what has been exchanged as a result of the contract. As our organisation operates within the entertainment business such an exchange can often be complicated so it is vital that all the essential terms are considered and clarified when initially formulating a contract.

The essential terms of a contract, which must be covered to ensure its validity, are:

* There must be an offer or agreement. This is " An indication of willingness to do or refrain from doing something that is capable of being converted by acceptance into a legally binding contract"(Oxford 1997). However, it must be clear in its intentions- an Invitation to treat is a generalised offer to many, such as a display in a shop window or a Declaration of intent which exists to invite offers in the future, such as a an auction. The offer must not be too vague. It must be clear what is being bought or sold, and at what price - otherwise the offer is automatically invalid. In the case of Scammel v. Ouston 1941 the parties agreed that Ouston should acquire from Scammel a new motor-van "on hire-purchase terms." The House of Lords held that the agreement was too vague to be enforced, since Hire purchase terms were many and various, and it was impossible to decide on which hire-purchase terms the parties intended to contract.

* There must be an acceptance. This is when all the terms and conditions of an offer have been agreed, and accepted by the party or parties entering into the contract with the initiator. It is essential at this point that all parties are aware of the terms and conditions they are entering into. Recently many entertainers have sought to void their contracts as they claim they signed when less famous and where unfamiliar with legal matters so thus unaware at the time of the long-term implications of entering into such agreements. They have argued that they did not know what they were signing at the time or read the small print. For this reason it is essential top the success and longevity of our business that we, and any parties we are involved with are completely aware of the terms of any contract. Case Law has established the following rules of acceptance:
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o Acceptance can only be made by the person to whom the offer is made.

o Acceptance must be absolute and unqualified. -The offeree cannot add extra terms and conditions. Doing so will be a counter offer and so it would be in the best interest of the offeror to make a new offer.

o Acceptance has to be communicated to the offeror. This will normally be through word of mouth or in writing but the contract is deemed to be formed at the time the offeror receives the acceptance. In the case of a posted ...

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