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Define ‘Contract’ - Leaving Cert Business - Question (B) - 2001
Question (B)
Define ‘Contract’. Outline why an ‘invitation to treat’ is not a contract.
Worked Solution & Example Answer:Define ‘Contract’ - Leaving Cert Business - Question (B) - 2001
Step 1
Define ‘Contract’
Answer
A contract is a legally binding agreement between two or more parties that creates mutual obligations enforceable by law. For a contract to be valid, it generally requires several key elements: offer, acceptance, consideration, intention to create legal relations, and capacity to contract. Each element ensures that the agreement is not only understood by the parties involved but also upheld within the legal system.
Step 2
Outline why an ‘invitation to treat’ is not a contract
Answer
An ‘invitation to treat’ is merely an indication that one party is open to negotiate terms, but it does not constitute a binding agreement. Unlike a contract, an invitation to treat does not contain unequivocal acceptance of an offer; rather, it invites others to make an offer. For example, advertisements, price tags, or display of items for sale typically serve as invitations to treat. Consequently, a response to an invitation does not guarantee acceptance, hence it cannot create a binding contract in itself.