Creating of a Legally Binding Contract

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The formation of a legally binding contract requires an offer to be made properly which should be accepted properly. An offer once accepted becomes a promise and when it forms a consideration for the parties, it becomes an agreement. When the parties to an agreement have an intention to create legal relations, the agreement becomes a contract. A legally binding contract gives legal rights to a party to a contract in case of breach of a contract by the other party. Let us take a deeper look at the formation of a contract. The most important thing is the competence of the parties to enter into a contract. Every person is competent to contract unless he is a minor or of an unsound mind. A contract with a minor is not a valid contract. Also, it cannot be validated by ratification by a minor when he reaches the age of majority. Simon and Davina can be easily assumed to be of the ages of majority. A contract with a person of unsound mind is also not a valid contract. There are some people who are occasionally of sound mind and occasionally of an unsound mind. The contracts made with them at the time of their sanity are valid contracts. However, the burden of proof falls on the party which contracted with such a person that he was of a sound mind when he entered into the contract. The first ingredient of a legally binding contract is an offer. When a person signifies to another person, his intention to do something or refrain from doing something in return of a promise that the other person would do or refrain from doing something, the first person is said to have made an offer to the second person. The first person would be called an offeror or proposer and the second person would be called an offeree. An offer should be made properly. It should be communicated to the offeree. There should not be any ambiguity in the terms of the offer i.e. the terms should be definite, clear and easy to understand. In Guthing v Lynn [1831] 2 B amp. Ad 232, 9 LJOSKB 181, the buyer of a horse promised to pay extra £5 if the horse is lucky for me. It was held that this promise was not enforceable as the statement was too vague to explain that in what way the horse was required to be lucky. An offer may be made generally to a variety of people or it may be made specifically to a particular person. It may contain a condition for acceptance which must be fulfilled for a valid acceptance. In this case, Simon is in the process of negotiation with Davina. It can be said that Simon’s offer to Davina is wide and open. He has made the offer of hiring Davina as a mentor to support the finalists of his TV program Your Hired. It is assumed here that Simon has offered Davina a definite sum of money for her services.