Elements of a Contract
BUS670 Legal Environment
Prof. Robert Tocker
September 2, 2013
A contract of employment is a type of a contract used in labor law to attribute rights and responsibilities between parties to a contract (Blum, 2007). On the one end stands an "employee" who is "employed" by an "employer". A written employment contract is a document that someone and their employee sign which sets forth the terms and conditions of the employment relationship (Tepper, 2011). Many rules, exceptions and considerations apply when dealing with employment contracts.
Suppose that the Fabulous Hotel hires you as head chef under a two-year employment contract. ...view middle of the document...
That is not the case with employment contract for the Fabulous Hotel. The employment contract in this case is governed by the common law.
Next, one must identify which elements of a contract must exist in order for this agreement to be enforceable; what separates the contract from a promise or a gift? There are five elements which must clearly exist in order to validate a contract and make it enforceable by a court; enforceable meaning that a court can impose monetary damages against a party who does not comply with contract (Seaquist, 2012). According to Seaquist, the five elements are: offer, acceptance, consideration, capacity and legality.
Contracts initiate with an offer. There are two parties to a contract: the offeror (person making the offer) and offeree (person who has the control to accept or deny said offer) (Seaquist, 2012). An offer must contain language which is definite and certain; where the transaction between parties looks like a contract where a reasonable third party agrees; and must be communicated to offeree in order to be valid in a court of law (Tepper, 2011). The result of an offer can be one of the following: lapse - which means the offer expires after certain amount of time; rejection/counteroffer – which is a denial of offer and/or rejection of original offer but negotiating a counter offer with various terms and/or conditions; and, revocation – which is where the offeror takes back the offer before the offeree accepts said offer (Seaquist, 2012). All three results symbolize no contract being created.
In the case of the Fabulous Hotel, the offeree should have carefully read and considered all terms under the employment contract prior to signing such contract. In doing so, perhaps the prospective employee would have expressed a counteroffer. Possibly, the terms of not working as a chef for two years after employment could have been reconsidered and revised to be only one year or no time at all after employment ends; or possibly, the area in which employee could not work within could have been minimalized.
Acceptance is another result of an offer, but one which actually results in the formation of a contract (Blum, 2007). Contract formation is the second element of a contract (Seaquist, 2012). With acceptance there is a mirror image rule, under the common law, which states the acceptance must mirror the offer and all the terms in the offer must match all the terms in the acceptance (Seaquist, 2012). Therefore, upon signing the employment contract, all terms established by the Fabulous Hotel in their employment contract are considered accepted under the common law.
Legal consideration is the third element of a contract under the common law (Seaquist, 2012). It is the concept of consideration that makes a gift different from a contract. “To have consideration means that the promise by the promisor gets the promisee to do something…not previously legally bound to do.” (Seaquist, 221) If the...