Question

What is the difference between a contract and an agreement?

Describe the requirements for a contract to be valid. Provide a business contract example that meets the four valid elements of a contract.

Describe a contract clause (term and condition) as it relates to the whole contract. Provide two examples (title of clauses) of business contract clauses or terms and conditions.

Describe and evaluate the consideration required in a legal contract? Why is consideration important to a business person?

Answer 1

In agreement can be defined as a common understanding or arrangement between two or more parties but the contract is a common and legal boundaries which could be imposed in the court of law.

For a contract to be valid, proper identification of the applicable legal aspects as well as enforceable code should be present. Both of the parties should be available at the point of the contract. Contract can be oral or can be written but specific proof of the contract is required to be enforceable in the specific court.

agreement, consideration, contractual capacity, and legality are the four basic requirement of any contract. Which should be properly included into the contract for a successful acceptance.

A contract clause is a specific provision or section within a written contract. Each clause in a contract addresses a specific aspect related to the overall subject matterof the agreement

Two Examples: Guarantee and Claims

In a contract, consideration is to give something of value in return for something else. This could be valid for buy a car or a contract for employment. The reason why consideration important to a business person? Because the business person is promising to pay “X” amount for a good or service that the other part has promised to provide contractually. Consideration is needed so that both parties incur some sort of burden or obligation in the agreement. Without consideration, the exchange would likely be classified as a gift. Gifts are treated differently than contract agreements, legally speaking.