The Formation of a Valid Business Contract Essay - 6

The Formation of a Valid Business Contract - Essay Example The essential element of the contract is an offer. It is an important ingredient because it defines the relationship and key issues in the contract. In order for the offer to stand as a legal entity, communication is a vital factor. The parties must communicate and accept the offer in the best terms available. Effective communication is essential in order to facilitate the receiving party with knowledge of whether to agree or reject the offer (Stevens 2004). In the case a person signs a contract without reading the terms of the contract, he is liable to the effects of miscommunication. A valid offer must be supported by certainty and validity on precise terms. The terms are considered definite in a situation where a reasonable person understands the terms. The clarity of the terms is reviewed basing the review on four pillars which are parties to the contract, duration of time for performance, value and subject matter/scope of services (Stevens 2004). A contract is considered enforceable when if the parties to the contract engage in an exchange of valuable price. Consideration is a consideration when there is mutuality. That is to mean that the parties to the contract must have valuable prices in exchange. The price is not only restricted to money but any other valuable consideration (Stevens 2004). There are many types of contracts, and all the types have an impact on the parties. There are those contracts that create an impact on the basis of creation. For example, express contracts. Words spoken or written make the contract. Another example is implied contracts where the contract is dependent on the conduct of a person or rather the circumstances under a particular case (Stevens 2004).