APPENDIX A: ASSIGNMENT/ PROJECT COVER SHEET

ASSIGNMENT/ PROJECT COVER SHEET

MWALE
Surname
YAHYA
First Name/s
157876
Student Number
INTRODUCTION BUSINESS LAW
Subject
1
Assignment Number
-
Tutor’s Name

Examination Venue
PIETERMARITZBURG-ASCOTT INN CONFERENCE CENTRE
Date Submitted

Submission (√) First Submission Resubmission
P0 BOX 1157
ESTCOURT
Postal Address
KWA ZULU NATAL
3310

Yahyamwale0301@gmail.com
E-Mail
(Work) 063 288 2440
(Home) 036 352 5537
Contact Numbers
(Cell) 063 288 2440

HIGHER CERTIFICATE IN BUSSINESS MANAGEMENT

Course/Intake

Declaration: I hereby declare that the assignment submitted is an original piece of work produced by myself.

Signature: Y.MWALE Date: 3 APRIL 2020

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TABLE OF CONTENT
INTRODUCTION………………………………………………………..PG 3
OFFER AND ACCEPTNACE…………………………………………PG 4
INTENTION TO CREATE LEGAL
RELATIONSHIP………………………………………………………….PG 5
CAPACITY TO CONTRACT……………………………………….PG 5 -8
GENUINE AND FREE CONSENT…………………………………..PG 9
LAWFUL OBJECT……………………………………………………….PG9-10
LAWFUL CONSIDERATION………………………………………PG10
CERTAINTY AND POSSIBILITY OF PERFORMANCE…..PG 11
LEGAL FORMALITIES………………………………………………PG 11
CONCLUSION………………………………………………………….PG11
BIBLIOGRAPHY………………………………………………………..PG12

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INTRODUTION
For Jarrod and nic to be in a valid contract both parties must be in agreement
(after an offer has been made by one party and accepted by the
other).Something of value must be exchanged -- such as cash, services, or
goods (or a promise to exchange such an item) -- for something else of value.
Jarrod who is below the age of 18 has limited contractual capacity and may
only enter with the assistance of a guardian.

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 1. Offer and Acceptance

Basically, a contract unfolds when an offer by one party is accepted by the other
party. The accepted offer should be without any qualification and be definite.
An offer needs to be clear, definite, complete and final. It should be
communicated to the offered. A proposal when accepted becomes a promise or
agreement. The offer and acceptance must be ‘consensus ad idem’ which means
that both the parties must agree on the same thing in the same sense i.e.
identity of wills or uniformity of minds.

The offer is the "why" of the contract, or what a party agrees to either do or
not to do upon signing the contract. For example, in a real estate contract, the
seller will offer to sell the property to the buyer for a certain price. The offer
must be clearly stated so that all parties understand what the expectations are.
In this example, the property is identified by address and perhaps also by the
county assessor's parcel number, and the price would be written clearly in the
contract.
If the offer is not clear, then the contract may not be specific enough for a
court to enforce.

Acceptance is exactly what it sounds like: the person receiving the offer agrees
to the conditions of the offer. Acceptance must be voluntary. This means that a
person who signs a contract when a gun is pointed directly at him is legally not
able to accept the offer, because he is under duress.
This is an extreme example but there are situations in which one party is being
blackmailed or threatened in other ways so that he is unable to complete and
sign the contract. These are not legally binding. The parties must be mutually
bound and agree to the terms of the contract without outside factors
influencing the acceptance of the offer.

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 2. Intention to Create Legal Relationship

The intention of the parties to a contract must be to create a legal relationship

between them. Agreements of social nature, as they do not contemplate legal
relationship, are not contracts. For instance, if a father fails to give his daughter
the promised pocket money, the daughter cannot sue the father, because it was
purely a domestic arrangement. Thus, it is clear that all agreements, which do
not result in legal relations, are not contracts.

Another aspect here is that the contract terms must adhere to the laws and
regulations in the state where the contract exists. An example of an illegal
contract is if a person signs a contract to rob a bank. Robbing a bank is not a
lawful action and thus the contract does not have legal intent.

3. Capacity to Contract

If an agreement is entered between parties who are competent enough to

contract, then the agreement becomes a contract.

One of the most essential elements of a valid contract is the competence of the
parties to make a contract. Capacity to contract of a person to be dependent on
three aspects; attaining the age of majority, being of sound mind, and not
disqualified from entering into a contract by any law that he is subject to.

“Every person is competent to contract who is of the age of majority

according to the law to which he is subject, and who is of sound mind
and is not disqualified from contracting by any law to which he is
subject.”

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So, we have three main aspects:

1. Attaining the age of majority

2. Being of sound mind
3. Not disqualified from entering into a contract by any law that he is
subject to

1] Attaining the Age of Majority

According to the Indian Majority Act, 1875, the age of majority
in India is defined as 18 years. For the purpose of entering into a
contract, even a day less than this age disqualifies the person from
being a party to the contract. Any person, domiciled in India, who has
not attained the age of 18 years is termed as a minor.

A Contract made with a Minor is Void

Since any person less than 18 years of age does not have the capacity
to contract, any agreement made with a minor is void ab-initio (from
the beginning).

Also, if a minor enters into a contract, then he cannot ratify it even

after he attains majority since the contract is void ab-initio. And, a
void agreement cannot be ratified.

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A Minor can be a Beneficiary of a Contract

While a minor cannot enter a contract, he can be the beneficiary of

one. Section 30 of the Indian Partnership Act, 1932, also specifies that
while a minor cannot become a partner in the partnership firm, the
benefits of the firm can be extended to him.

Example, Peter lends some money to his neighbour, John and asks him
to mortgage his house as security. John agrees and the mortgage deed
is made favouring Peter’s 10-year-old son – Oliver. John fails to repay
the loan and Peter, as the natural guardian of Oliver, files a suit against
John to recover his money. The Court holds the case since a minor can
be a beneficiary of a contract.

A Minor is always given the Benefit of being a Minor

Even if a minor falsely represents himself as a major and takes a loan

or enters into a contract, he can plead minority. The rule of estoppel
cannot be applied against a minor. He can plea his minority in defence.

Contract by Guardian

Under certain circumstances, a guardian of a minor can enter into a

valid contract on behalf of the minor. Such a contract, which the
guardian enters into, for the benefit of the minor, can also be enforced
by the minor.

However, guardians cannot bind a minor by a contract for buying

immovable property. But, a contract entered into by a certified
guardian of a minor, appointed by the Court, with approval from the
Court for the sale of a minor’s property can be enforced.

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Insolvency

A minor cannot be declared insolvent as he cannot avail debts.

Also, if some dues are pending from the properties of the minor and
he is not personally liable for the same.

Joint contract by a Minor and an Adult

In case of a joint contract between an adult and a minor, executed by

the guardian on behalf of the minor, the liability of the contract falls
on the adult.

2] Person of Sound Mind

According to Section 12 of the Indian Contract Act, 1872, for the
purpose of entering into a contract, a person is said to be of sound
mind if he is capable of understanding the contract and being able to
assess its effects upon his interests.

It is important to note that a person who is usually of an unsound

mind, but occasionally of a sound mind, can enter a contract when he
is of sound mind. No person can enter a contract when he is of
unsound mind, even if he is so temporarily. A contract made by a
person of an unsound mind is void.

3] Disqualified Persons
Apart from minors and people with unsound minds, there are other
people who cannot enter into a contract. I.e. do not have the capacity
to contract. The reasons for disqualification can include, political
status, legal status, etc. Some such persons are foreign sovereigns and
ambassadors, alien enemy, convicts, insolvents, etc

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 4. Genuine and Free Consent

Free consent is another essential element of a valid contract. An

agreement must have been made by free consent of the parties. The
contract would be void in case of mutual mistakes. When consent is
obtained by unfair means, the contract would be voidable.

There is absence of free consent’ if the agreement is induced by (ii)

coercion, (ii) undue influence, (iii) fraud, (IV) misrepresentation, or (v)
mistake (Sec. 14). If the agreement is vitiated by any of the first four
factors, the contract would be voidable and cannot be enforced by the
party guilty of coercion, undue influence etc.

The other party (I. e., the aggrieved party) can either reject the
contract or accept it, subject to the rules laid down in the Act. If the
agreement is induced by mutual mistake which is material to the
agreement, it would be void (Sec. 20).

5. Lawful Object

Objectives of an agreement should be lawful. It must not be illegal or

immoral or opposed to public policy. It is lawful unless it is forbidden
by law. When the object of a contract is not lawful, the contract is void.

For the formation of a valid contract it is also necessary that the

parties to an agreement must agree for a lawful object. The object for
which the agreement has been entered into must not be fraudulent

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or illegal or immoral or opposed to public policy or must not imply
injury to the person or property of another (Sec. 23).

If the object is unlawful for one or the other of the reasons mentioned
above the agreement is void. Thus, when a landlord knowingly lets a
house to a prostitute to carry on prostitution, he cannot recover the
rent through a court of law.

6. Lawful Consideration

Something in return is Consideration. In every contract, agreement

must be supported by consideration. It must be lawful and real.

Consideration has been defined as the price paid by one party for the
promise of the other. An agreement is legally enforceable only when
each of the parties to it gives something and gets something.

The something given or obtained is the price for the promise and is
called ‘consideration’. Subject to certain exceptions, gratuitous
promises are not enforceable at law.

The ‘consideration’ may be an act (doing something) or forbearance

(not doing something) or a promise to do or not to do something. It
may be past, present or future. But only those considerations are valid
which are ‘lawful’.

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 7. Certainty and Possibility of Performance

The agreements, in which the meaning is uncertain or if the

agreement is not capable of being made certain, it is deemed void.
T&C of the contract should always be certain and cannot be vague.
Any contract that are uncertain are considered void. The terms of the
agreement must also be capable of performance and should not
enforce impossible act.

8. Legal Formalities

Legal formalities if any required for particular agreement such as

registration, writing, they must be followed. Writing is essential in
order to effect a sale, lease, mortgage, gift of immovable property etc.
Registration is required in such cases and legal formalities in the
relevant legislation should be strictly followed.

CONCLUCSION
In conclusion Jarrod and Nic may enter into a valid contract on
terms that both parties agreement must be lawful, Intention to
Create Legal Relationship, Capacity to contract, Genuine and
Free Consent, Lawful Object, Lawful Consideration, Certainty
and Possibility of Performance and Legal Formalities.

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BIBLIOGRAPHY
https://smallbusiness.chron.com/5-requirements-contract-15616.html

https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-ii/capacity-to-
contract/

https://accountlearning.com/essential-elements-of-a-valid-contract/

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