Question

Discuss the four components of a valid contract and apply them to a contract with a vendor to purchase a new CT scanner. What would you include in the contract? How would you be sure it would be valid?

Answer 1

The four components of a valid contract are as follows:-

a) Offer - It is the first element of a valid contract without which a contract cannot start. In this case a buyer needs to make an offer, in order to start the valid contract.

b) Acceptance :- This is the second element of a valid contract, which means in order for a contract to be valid the offer which was made must be accepted by the other party. If there is any discussion still going on then it cannot be a valid contract. In this case the offer made by buyer to the vendor should be accepted, regarding the purchase of CT scanner.

c) Intention to create legal relationship - There should be a clear intention between the two parties to enter into a binding relationship. If there is no legal intention, then there will be a lawsuit. In this case, the buyer and vendor should have clear intentions to enter into binding relationship.

d) Consideration - It refers to the exchange value. If a person gives something then he expects something in return for the service or product provided by him. In this case , money is the consideration as the vendor will provide CT scanner and the buyer will pay money in exchange for CT scanner.

The contract in order to be valid should have all the elements. But at least should have an agreement and a consideration. If these two elements are present, then the contract can be legally valid. In this way we can make sure that a contract is legally valid.