Elements of Contract between Woohoo Wholesale & Provident Solutions
The use of contracts can serve to be an imperative aspect in the negotiation process between parties who intend to create legal relations. Without the use of formal contracts, differing levels of ambiguity can occur between parties in regards to issues surrounding what promises/offers exist between the parties and what could be the possible consequences in cases where one or more of the parties fail to fulfil the terms agreed between them.
A level of ambiguity appears to have arisen in the example given in the case study regarding Woohoo Wholesale (WW) and Provident Solutions (PS). This Essay services to investigate whether or not all of the necessary elements for a legal contract to be valid were in place.
Firstly, in order for a contract to be legally ...view middle of the document...
* Intention to create legal relations: This presumption can be rebutted with the onus being on the party who wishes to deny intent to create legal relations proving so through the relevant legal channels.
* Certainty of Terms: Potentially the area where the most ambiguity may occur. Courts will not enforce vague or incomplete agreements and may press to clear uncertainty.
* Capacity to Contract: For example, contracts involving minors are highly likely to be nullified.
In regards to PS’s offer of quotation NUMBER 421, there was a flow of negotiation between WW and PS involving proposals and counterproposals.
WW’s initial response to quotation NUMBER 421, stated that they agree to pay the total costs (£1.3m) providing that both parties agreed to a formal contract and legitimate expenses would be reimbursed if a formal contract could not be agreed upon. This constitutes consideration on WW’s part. PS responded with the counterproposal stating that on the failure to agree on a formal contract, PS reserved the right to claim back legitimate expenses and a reasonable amount of profit they would have made in the future if the formal contract had been finalised.
Though a final contract was drafted but never signed, the fact that work commenced between the parties demonstrates that there was an implied contract meaning WW had not intended to rebut PS’s counterproposal through either counter-negotiation or inactivity. Therefore they had effectively agreed to the clause which PS had proposed in regards to failure to agree on a formal contract.
In conclusion, all six elements of a contract were in place. WW had agreed to the contractual clauses once the terms of the contract were in the process of being conducted hence they are not entitled compensation; but they are liable to compensate PS for the 40 computers PS had provided them with which were not already paid for.