Essential elements of any valid contract are;
LO = Legal Objective
CP = Competent Parties; also called "Contract Capacity of Parties"
LC = Legal Consideration
RC = Reality of Consent; also called "Voluntary Agreement"
OA = Offer and Acceptance; also "Manifestation of Mutual Assent"
Contract Theory examines the logical and conceptual structures that arise in the process of making, honoring, and enforcing contracts. The touchstone of Anglo-American contract law is the determination of contractual intent. Two theories have competed for center stage: the subjective theory of the "meeting of the minds" and the objective theory in which the parties' manifestations and the transaction's contextual factors became the means for contract interpretation and enforcement. The implementation of the objective theory of contract is the "reasonable person standard." The importance of the synthesis of the objective and subjective elements of contracts is crucial for a complete understanding of contract law (Cohen, 21).
I this why court held that there was not a valid agreement here because since it would be impractical for the court to try to determine the truth of this statement, it uses the following test instead: if the outward conduct of the parties would have indicated to a reasonable bystander a serious intention to enter into an agreement, then the contract is deemed legally binding. Another circumstance where the reasonable bystander is used occurs when one party has inadvertently misstated the terms of the contract, and the other party sues to enforce those terms: if it would have been clear to a reasonable bystander that a mistake had been made, then the contract is voidable by the party who made the error; otherwise, the contract is binding.
Descriptive statements in advertisements as to the quality or special characteristics of a property may be reasonably understood to be warranties, becoming....
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