HPKV Consulting Unit LLB

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5 Simple Steps

for Agreement Formation

Documents For Agreement Formation

Identity proof of parties involvedNature of business

Types of Agreement Formation

Consultancy Agreement

Consultancy agreement lays down relevant details with regards to the relationship amidst employer and consultant.

Freelancer Agreement

Freelance agreement lays down all the relevant details with regards to the relationship amidst the client and freelancer.

Service-Level Agreement

The Service-Level Agreement can be deemed as a formal document implemented between the user and the service provider.

Master-Service Agreement

Master-service agreement can be termed as a contract-based agreement constructed between two different parties which include the service provider and client.

Vendor Agreement

Vendor Agreement is the legal agreement that stipulates the conditions using which the work needs to be performed by a vendor.

Franchise Agreement

Franchise Agreement can be defined as the agreement where the franchise owner agrees for lending out the business system or trade name to any other person or entity franchise.

Joint Venture Agreement

JV or Joint Venture is the agreement entered by the group of companies or persons in order to contribute to a business together for a particular project.

Founders’ Agreement

Founders’s agreement is the outlining of the roles & responsibilities to be adhered to by the company’s founding members.

Shareholders’ Agreement

Shareholders’ Agreement can be deemed as the agreement that governs a relationship between shareholders of the company.

Non-Disclosure Agreement

NDA or the Non-Disclosure Agreement is the legal contract that contains information that is particularly confidential and restricted to be accessed by 3rd parties.

Share Purchase Agreement

Share Purchase Agreement or SPA is the agreement constructed between two parties where the sellers agree to sell a stated number the shares to its buyers for a given price.

About Agreement Formation

Agreement is a legally binding contract that binds together two parties within legal foundations where both parties are liable to adhere to the obligations. Several things go into contract formation. However, the initial step starts with one of the two parties making the offer while other accepting the same. Another major factor deciding the meeting is legal negotiation between the parties involved. A legal agreement can be formed by going through three stages which include offer, acceptance, and consideration.

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Frequently Asked Questions
What are the key elements of a binding contract?

The elements of a contract are: (i) an agreement; (ii) between competent parties; (iii) based upon the genuine assent of the parties; (iv) supported by consideration; (v) made for a lawful objective; and (vi) in the form required by law.

Please explain what competent means regarding the requirement that an agreement be between competent parties in order for a contract to be effective?

The law generally presumes that everyone has the capacity to contract.  But if a party does lack capacity, then the contract is usually voidable and the party without capacity may avoid the contract. Parties to an agreement must have contractual capacity before the agreement will be binding on both parties.  Contractual capacity is the ability to understand that a contract is being made and to understand its general nature. The fact that a person fails to completely understand the full meaning and all ramifications of a contract does not mean that the person lacks contractual capacity.

My 15-year old son, who looks older, just signed a contract joining a health club which has “dues” of $50.00 a month. Is this contract valid?

No, the contract is not valid. Some classes of persons such as people under the age of 21, or in most states, under the age of 18, are deemed by law to lack contractual capacity. With some exceptions, a contract made by a minor is voidable.  The minor, in other words, may avoid the legal liability under a contract. Upon reaching the age of majority, a minor may affirm or ratify the contract and therefore make it contractually binding on him.

A minor will be liable for the reasonable value of  necessaries. Necessaries would include, at the very least, food, clothing, and shelter.  Courts have also included within the definition of necessaries medical care and a minor’s necessary legal services. Loans to procure necessaries are also necessaries.

How does a mistake affect the enforceability of an agreement?

The agreement of parties may be affected by the fact that one or both of them made a mistake.  A unilateral mistake is a mistake made by one party to the agreement. A mistake that is unknown to the other party usually does not affect the enforceability of the agreement.  A unilateral mistake regarding a fact does not affect the contract. For example, if a customer orders a water-resistant coat thinking that this means waterproof, the customer cannot legally get out of the contract unless the sale was made with some sort of misrepresenta­tion as to the meaning of those words.  An exception to this would be if the seller knew that the buyer misunderstood those terms, but went ahead and sold the coat anyway.

If both parties to an agreement make the same mistake regarding a key factual matter, the agreement is void.  For example, a contract is void if both parties mistakenly believe that the contract can be performed when, in fact, it is impossible to perform it.  Suppose Smith promises Jones over lunch to sell Jones an antique car located in Smith’s garage. Assume both parties believe the automobile is in Smith’s garage.  However, the car had been destroyed by fire an hour before the agreement and Smith had not learned of this. Since this fact was unknown to both parties, there is a mutual mistake as to the possibility of performing the contract.  The agreement is therefore void.

What does the term consideration mean as far as the enforceability of an agreement is concerned?

Consideration is what the promisor demands and receives as the price for the promise.  The promisor is the person making the promise, and the promisee is the person to whom the promise is made.  Consideration consists of something that the promisor is not otherwise entitled to. It is not necessary to use the word “consideration” in a contract.

Consideration is the price paid for the promise.  When thinking of consideration, think in terms of legal value as opposed to economic value.  While economic value (e.g., money) is the most common form of consideration, consideration does not have to involve money. In order for a contract to be enforceable, each party to the contract must change his or her legal position in some way. If an agreement lacks consideration, it is generally not a binding and enforceable contract.