Business Law Essay

Introduction

A contract is an agreement between two or more parties to do, not do, or promise something. Contract law in Australia is based on the inherited English common law regarding contract, with specific statutory modifications of principles in some areas. In Australia, the law of equity has also played an increasing part in changing the laws regarding contracts, and what occurs when they are breached. In this essay, I will discuss two essential elements of the formation of contract law - intention to create legal relations and consideration.

What is contract law?

The law of contract is very important in business as well as in day-to-day life. It governs most commercial transactions: sale and carriage of goods, insurance, hire purchase, rental agreements and
employment, to name a few.

A contract can be defined as an agreement containing promises made between two or more parties with the intention of creating certain legal rights and obligation and enforceable in a court of law.[1] A contract can arise is a plethora of scenarios, from buying a loaf of bread in the corner shop, to the sale of a house. It is unsurprising therefore that certainty is needed before the Courts will intervene to enforce any agreement. The law of contract has confirmed the basic foundations of any contract, regardless of its complexity and substance, that it must contain to make the agreement enforceable in law.

In Australia contract law is primarily regulated by the 'common law', but increasingly statutes are supplementing the common law of contract - particularly in relation to consumer protection.   It is basically born out of the mutual mistrust of business people. In wide definition, the law of contract is a set of rules governing the relationship, content and validity of an agreement between two or more persons (individuals, companies or other institution) regarding the sale of goods, provision of services or exchange of interests or ownership. Contract law has...