Starting a new business requires a systematic and organized approach so that all the necessary functions can be completed ineffective mode. In the present report significance of terms of contracts for an entrepreneur have been described. Difference between tort and contractual liability and similarities between them is also defined. In addition to that vicarious liability of a person is also mentioned in the report.
1.1 An entrepreneur is trying for starting a new business that is related with building contractor and Peter Abraham is aware about many things that are used while doing agreement with other parties. Peter Abraham is aware that he can be sued for damaging breach of contract but he lacks proper information about formation of contracts or the effect of terms used in agreement (McKendrick, 2014). It is assertive that essential terms of contract should be known to him. While making agreements some essential elements that are needed to be included in systematic order :-
Offer And Acceptance:- In contract it is critical to mention offer and it is vary important element that is mentioned in the agreement. It is defined as willingness shown by a party for entering into a contract (Langfield, Liu and Ota, 2014). If offer given by a party is accepted by another than it is known as acceptance shown by a party for entering into a contract. If any party breaches terms and conditions mentioned in the agreement than offer can be revoked in such conditions. An agreement is declared valid when offer and acceptance and other essential terms are mentioned in contract. Different parties that are showing intention for entering into contract should render their valuable consideration (Chen-Wishart, 2012). Offer can be given in written format and through verbal manner. It is exchange of promise which is given in return for entering into a legal contract. The case of Payne v Cave (1789)
Mentions that offer made in a contract should be clearly defined and offeror should provide proper details while mentioning terms and conditions in contract. According to the case of Gibson v MCC (1979) It has been referred that offer must be accepted by parties and when a party show willingness than it is considered as acceptance shown by a party for accepting terms and conditions that are mentioned in contract.
Intention For Entering Into A Legal Contract:- This is explains as intention or willingness shown by parties for entering into a legally binding agreement (Warren, 2014). It is also a significant element that is mentioned in the contract. If a contract is created without any intention for creating legal relation than parties included do not have any legal right to sue each another.
Capacity and Consideration:- Peter Abraham is trying for entering into a business of self contracting and it is required that he should least be aware about various significant elements of contract. Capacity is defined as ability of a person to make agreement and for that it is required that person should not be a minor (Hudson, 2012). An individual who is involved in illegal offences and facing criminal charges can also not be declared capable for making contract. Consideration is defined as act of promise which is made by parties in return for entering into a legal agreement. It has been referred from the case of Labriola V. Pollard Group, Inc. (2004) it is observed that it is assertive that all the promises made under the contract should be fulfilled by parties involved for signing an agreements.
1.2 In entrepreneurship, Peter Abraham is a good example who is trying for starting a self contracting business and it is required that he should make efforts for learning essential elements of valid contract. There are situations in business when it is required to make agreements and contracts with diverse stakeholders of business (Hart and Bulloch, 2012). Suppliers, shareholders, business partners and other stakeholders gives influences on various business activities and it is critical that proper legal agreements should be signed with them.
Written contract:- Printed documents are prepared while making written contract and all the terms and conditions of agreement are mentioned in contract. If any party breaches or void terms of contracts than legal actions can be claims and obligations is enforced on all the parties that involve for signing a contract (Whish and Bailey, 2015). All the parties that are involved for making contracts properly sign on all the terms that are mentioned in the documents. It is advantageous to make contracts in legal manner and written contracts provide a effective medium for signing agreements in appropriate manner. It is easy to sue parties who involves in voiding terms and conditions of