Evaluation Of Contract Law And Formation Of Online Contract

Post published:25/06/2023
Post category:Blog
Reading time:8 mins read

Written By: Swapna Sudha Sahoo

Introduction

For the formation of a contract, there must be a relationship between two parties. The relationship must be based on legal terms. The contract is considered to be based on the legal agreement between two parties. The various elements for the formation of a contract are offer and acceptance. One party must be making an offer and the other party should make an acceptance of the provisions of the legal agreement. There must be the presence of two parties for the offer and acceptance thing.

The second element which is necessary is the meeting of the minds of both parties. The two parties must be able to negotiate with each other without any kind of differences of opinion. There must be a clear meeting of the minds. The intention of both parties must be legally binding.

If there is a dispute between the two parties, such as a breach of contract lawsuit, courts will examine multiple elements to determine if the agreement was valid, including the:

Offer.
Acceptance.
Consideration.

Additional elements that can be examined include:

Whether formalities were observed.
The legal capacity, or lack thereof, of the parties.
Whether the parties intended to create a legal relationship.

The proposal of an offer is the foremost thing in framing a contract. Through the process of offer, the other party comes into contact and form legal terms with the party with a clear intention of framing a legal agreement. The intention of the offer must be very clear and to the point to the other party.

An offer can also be understood as the inclination to enter into a legally binding contract as soon as the offeree accepts. It’s important to understand that an invitation to treat is different from an offer. An invitation to treat means a party is open to hearing offers, which they will then decide whether to accept or not.

Offers can be made to individuals and even the world at large, meaning the scope of an offer can vary widely. When an offer is made, it should include language that indicates the offeror is willing to enter into a contract without any additional negotiations taking place upon acceptance.

Auctions are the perfect example of how offers work. When the auctioneer opens the bidding, it would be considered an invitation to treat, as they are ready to hear offers. In this case, the offers are the attendees’ bids. If the auctioneer accepts the bid, a contract is formed.

Acceptance

Acceptance takes place the moment a person accepts the offer made to him/her. There are various forms of acceptance. An acceptance can take the shape of both words as well as in the form of writing. It can be both in written form as well as in verbal form. E.g. a person acceptance is based on both writing and oral form as well as in the form of conduct.

The acceptance must be equal to the offer
The offeree must have full knowledge about the offer
The offeree must clearly communicate their acceptance to the offeror. Once the offer is accepted, it becomes an acceptance.

Counter Offer

It’s possible that the offeree can make a counteroffer instead of accepting the original offer. With a counteroffer, the offeree would propose new terms or a change in the original terms. The party that originally made the offer has the ability to either reject or accept the counteroffer. Once a counteroffer is made, acceptance of the original offer is no longer possible, as a counteroffer is considered a rejection of the first offer.

Communicating Acceptance

If someone accepts an offer without the authorization of the offeree, the acceptance is not considered legal. Additionally, offerors cannot hold the offeree to contracts if no response is given. If the acceptance occurs, As a rule, the offeree must clearly communicate their acceptance to the offeror. Contracts do not become legally binding until this communication occurs. The offeree can either communicate their acceptance themselves, or they can authorize a representative, such as an attorney, to alert the offeror that their offer has been accepted.nt forms of communication, such as an email or telex, the contract becomes binding as soon as the offeror receives the notification.

Conclusion

A contract is a legally binding agreement between two parties while there is a presence of consideration and the object of the agreement is legal. Otherwise, the contract is void from the start. The Indian Contract Act, 1872 comprehensively deals with contracts and explains what constitutes a valid contract and what the essentials of the contracts are.

This document deals with several parts of contracts and how it is applied with respect to personal and business relationships. And how contracts are tested by courts objectively and subjectively to determine the intention behind the formation of contracts and test their legality or legal validity. The document also covers several types of contracts and other relevant parts of a contract like letters of intent, general offers, etc.