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Nov 8, 2017 in Economics
Business and Corporate Law
In the course of running a business, there are various laws that get applied to ensure that such a business relates well with other stakeholders. These stakeholders may include customers, the government and other business companies. This paper seeks to discuss the various laws that govern the running of a business. The paper will look at mutual assent, conduct invalidating assent and consideration in relation to running of business and corporate affairs.
Mutual assent can be defined as a two way agreement between parties with the intention of making a contract between them. Mutual assent signifies the moment at which an agreement has been agreed upon with the assumption that all the necessary legal requirements have been met. In order for a mutual assent to be created, there must have been an offer. The offer given by one of the parties should be capable of creating legal relations that will bide the two parties in their agreement. The offer must be certain and definite. Unless the terms of the contract are clear, no such contracts can be made.
The main purpose for creating an offer should be to get the assent of the other party. It should, therefore, be distinguished from a mere expression of intent. An offer should not indicate that non-compliance of one of its rule will amount to it being accepted. For example, an offer should not indicate that if it is not accepted by a certain date it will be presumed to have been accepted. An invitation to offer cannot be assumed to be an offer by itself. An offer must be at all times be distinguished from an invitation to an offer.
The law stipulates that an offer remains open for acceptance for the time stated on the offer or if not time is indicated for a reasonable time. The two durations hold provided the offer is not withdrawn sooner. In most cases, the party putting forward the offer will stipulate the duration of the offer. However, if this is not indicated in the offer, the offer will only be valid for a reasonable time. The duration of an offer will in most cases depend on the nature of the offer. In a case where the offer involves a lot of legal processes, the duration may be much longer than when the contract does not involve too many legal processes.
Communication of acceptance in contract law is vital since from the time the offer is made to the time when the contract is made; the two parties do not have any obligations to the offer. This is because no contract exists until an offer is accepted. Under normal circumstances, the offer will not have been deemed as accepted if one party’s acceptance does not indicate readiness of the party to be bound in a contract. The response cannot be deemed to be an acceptance if it has strings attached. Such strings may include a condition that the offer will be accepted only upon inclusion of certain demands. Communication of acceptance should further be made through the authorized channels for it to be valid.
Conduct Invalidating Assent
When assessing whether there is mutual assent to a contract, one of the vital issues that should be addressed is whether there is the existence of a conduct that invalidates assent. There are several conducts that may invalidate an assent. One such conduct is any unlawful act that overcomes the free will of a party. This conduct is referred to as duress. This may involve physically compelling a party to agree to an offer without their consent. A company should not take advantage of another company by reason of having a dominant position that is based upon a confidential relationship. This conduct is referred to as undue influence. Fraud should further not be used by either party.
Fraud may comprise any intentional representation of false information. Any misrepresentation that deceives a party as to the nature of the offer given renders the transaction void. Any mistake committed in the making of a contract which entails one party mistaking the other party renders a contract void. Such mistakes may either be mutual or unilateral. A mutual mistake refers to where both parties have got mistaken as to the same facts. A unilateral mistake refers to where only one party got mistaken.
Consideration in corporate law refers to the price for which the promise of one party is bought by another party. It can be described as something given or received; therefore, it is an essential element of a contract. Any agreement that lacks consideration cannot be enforced by law. This leads to the principle of ‘no consideration-no contract’. There are equally several essential elements of consideration. A consideration must proceed at the desire of the party that promises it. Any acts carried out at the desire of a third party cannot form part of a consideration and neither can any services that may be rendered without request form a part of a consideration.
A consideration does not need to essentially come from the promise. A third party can as well make a consideration. As long as there is presence of a consideration, the party from which it comes from matters less. A consideration is further not sensitive to time. It may be from the past, present or future. Regardless of the time of its formulation, a consideration remains valid, and the parties to it remain obliged to it. A consideration should take the form of as something of value before the law. This may be in the form of money or other forms of assets. However, the law does not insist on the adequacy of a consideration but rather on its presence. The adequacy of a consideration should be determined by the parties to the agreement.
There are conditions when a consideration may not be necessary. One such condition is when an agreement gets made on account of love and affection. Such agreements are, however, enforceable by law when put in writing. Another instance is where the agreement entails compensation of a past service that got offered voluntarily. In such a case, a consideration may not be necessary. An agreement that entails paying a time-barred debt may as well not require a consideration. Under the law of limitation, the time during which a case may be filed to recover a debt is stipulated. When this time expires, the inclusion of a consideration to an agreement may not be necessary. The last condition under which a consideration may not be necessary is when the agreement entails giving of a gift. Giving of a gift cannot be considered as a contract and as such does not require a consideration.
In the corporate world, the making of a contract requires that both parties be aware of the relevant laws that govern such making of contracts. One of the factors that should be considered is that there is the presence of a mutual assent to the offers made by the parties. A consideration is equally vital during the making of a contract. Companies should be seen, therefore, to be following such rules in order to ensure that the contracts made are legal.