The Importance Of The Essential Elements Required For The Formation Of A Valid Contract

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LO 1:Understand the essential elements of a valid contract in a business context.

LO 2: LO2 Be able to apply theelements of a contract inbusiness situations.

Case 1.1- Payne v Cave (1789)

The defendant made the highest bid for the plaintiff 's goods at an auction sale, but he withdrew his bid before the fall of the auctioneer 's hammer. It was held that the defendant was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer.

1.1 Explain the importance of the essential elements required for the formation of a valid contract. Discuss the elements in Case 1.1 given. (AC 1.1 : Explain the importance of the essential elements required for the formation of a valid contract).
[Grade Descriptors M1]

• A contract is a binding between two parties that is enforceable by law or equity and without enforceable contracts business will collapse, and any contract is established on foundation, those foundations are the essential elements involved in forming a legal contract:
1. Agreement which is divided into two section (offer and acceptance)
a. An Agreement is a less official establishment of a commitment between two parties, it can be expressed in oral or written, meaning it’s not a formal contract as it might be missing one of the important elements of a valid contract “acceptance”, and therefore at that stage it might still an offer.
b. 0ffer: An offer is a

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