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Explain the following terms in relation to the law of contract, providing an example in each case - Leaving Cert Business - Question 1(A) - 2019
Question 1(A)
Explain the following terms in relation to the law of contract, providing an example in each case. Capacity to Contract Consideration Legality of Form Consent to Co... show full transcript
Worked Solution & Example Answer:Explain the following terms in relation to the law of contract, providing an example in each case - Leaving Cert Business - Question 1(A) - 2019
Step 1
Capacity to Contract
Answer
Capacity to contract refers to the legal ability of an individual or entity to enter into a binding contract. Generally, all natural persons (individuals) and legal entities (such as corporations) have the legal capacity to contract. However, certain restrictions apply:
- Minors (individuals under 18 years of age) typically cannot enter into contracts unless they are for necessities like food and shelter.
- Individuals under the influence of drugs or alcohol may lack the capacity at the time of contracting.
- Companies must operate within the scope of their charter (Ultra Vires).
Example: A 16-year-old attempting to sign a lease agreement is likely to have that contract declared void.
Step 2
Consideration
Answer
Consideration is a core element of a valid contract, referring to what each party agrees to exchange. It can be money, services, or a promise to act. For a contract to be enforceable, consideration must be present, as it demonstrates that both parties are committed to the agreement.
Example: If Person A agrees to pay Person B $500 for a computer, Person A's payment serves as consideration, while the computer provided by Person B serves as consideration in return.
Step 3
Legality of Form
Answer
For a contract to be legally enforceable, it must comply with the legal requirements and formalities defined by law. Some contracts must be in writing to be valid, depending on jurisdiction and the nature of the agreement.
Example: In many jurisdictions, agreements involving real estate transactions must be made in writing to be enforceable.
Step 4
Consent to Contract
Answer
Consent to contract means that both parties must genuinely agree to the contract terms without any form of coercion or undue influence. Consent must be obtained freely, ensuring that all parties are aware of their commitments. If consent is obtained through misrepresentation or duress, the contract may be voidable.
Example: If one party threatens another to sign a contract, the coerced party can argue that there was no real consent, making the contract unenforceable.