A business contract is established when you are dealing...

A contract is an agreement or a promise which is made between two or more parties that the courts will enforce. A business contract is established when you are dealing something related to business with your partner. In hospitality industry, a business contract is commonly used. The uses of business contract is to ensure that both parties to an agreement can more clearly understand exactly what they have agreed or promised to do in their business.

A contract is valid when the offer is accepted. For instance, Sandra has made an agreement with me, she is agreed to purchase my secondhand smart phone which cost RM600. Our contract is valid when she makes an agreement with me. Our contract is done after she paid the RM600 to me, and I give my secondhand smart phone to her.

Valid contracts may be establish either in writing or verbally. In most cases, written contracts are preferred over verbal contracts because it is easier to clearly establish the precise responsibilities of each party when those responsibilities are completely spelled out. In hospitality industry, most transactions with guests are established orally, rather than in writing despite the fact that written contracts have many distinct advantages over verbal agreements.

1.2 Main Elements Constituting a Valid Contract

All contracts, whether verbal or written, also must consist of some specific elements that will make them legally enforceable in the courts of law. These elements are very important because if any of the elements are missing, the courts would consider the contract is unenforceable. A contract must be legally valid and it must include of an offer, consideration, acceptance, capacity and legality in order to be enforceable.

1.2.1 Offer

One of the element required in a lawfully enforceable contract is an offer, it is set that these parties are legally capable of entering into a contract when the contract involves a legal activity. This offer is mean the offering party is willing to do for another and what he or she expected in return. The offer might include of specific instructions like where, when, how and to whom the offer is made. The offer might also include of time frames or deadlines for acceptance which is either implied or clearly stated. Besides that, the offer also includes the price or the terms of offer.

The offer is made when a hotel foodservice director placed an order to a supplier for producing. The foodservice director is offered to buy the necessary products at a specific price which is quoted by the supplier. The reason of an offer is a required element in a contract is understandable. An offer is setting the term and responsibilities of both parties.

For example, when Adam and his friends enter a bistro and read the menu given, they are reading at a chain of offers from the bistro manager. The menu may state, "Package A, One dozen of Heineken (Regular Bottle) which cost

RM250." While the contract offer could be stated as, "Package B, If you purchase Two dozen of Heineken (Regular Bottle) which cost RM500, our bistro will provide you another big jug(1500ml) of Heineken for FREE while stock last." After read this menu, Adam and his friends are interested in Package B. Thus, Adam and his friends who have purchased Package B would be free another jug of Heineken. A valid contract is completed when Adam and his friends paid for the offered Package B and also received another jug of Heineken for free.

1.2.2 Consideration

Consideration played the role as an important part of the contract which can be well known as something of value, like the payment for promises of the performance that agreed to in a contract. Consideration has to flow in both ways in order to make a contract to be valid. Such as in the case of the Heineken packages promotion in bistro just mentioned, the consideration by bistro is the Heineken packages. Whereas the guests, Adam and his friends were agreeing to pay RM500 as consideration by ordering the Package B.

Consideration could be something else other than money. If the manager of banquet department agrees to hosting more banquets like annual dinner, wedding and birthday banquets, the consideration paid by the manager of banquet is the function room, while the consideration paid by the waiters or waitresses are the services.

1.2.3 Acceptance

It takes at least two parties in order to create a contract hence a legal offer and its consideration must be unmistakably accepted by another party before the

contract turns into an existence. It is quite important to note that the acceptance must follow the terms of the offer in order the acceptance could make a contract valid. If the acceptance does not follow the offer, it is considered as a counteroffer rather than an acceptance. An express contract has been created when an acceptance that mirrors the offer is made.

An offer might be accepted orally or in writing, unless the offer itself specifies the manner of acceptance. It must be comprehensible that the terms of offer are accepted in fact.

For example, in the cases of the Heineken packages promotion in bistro just mentioned, Adam and his friends accepted the Package B which offered by the manager of bistro. It means they agreed to pay the amount of RM500 and accepted the terms and conditions that made by the manager of bistro which is giving away another jug of Heineken.

1.2.4 Capacity

Capacity in contract is mean the parties to the contract must have the legal capacity to do so. As a general rule, minors, people who below the age of eighteen´┐ŻC(Age of Majority Act) have no capacity to enter into contracts. Society requires a party to enter into contract must reach the minimum age before he or she can legally promise to the principles made in the contract. It is because of minors can make decision properly due to their age and thoughts. In addition, an individual would not be able to enter into an enforceable contract if he or she has the mental capacity to understand what the terms or requirements in the contract.

This incapacity of an individual could be due to a variety of reasons such as from mental illness to inebriation.

For example a mad person could not think like a normal people, therefore this mad person has no capacity to make a contract.

1.2.5 Legality

Actually there are not all agreements or promises made by two or more parties are legally valid. Even if the parties made a contract that is considered legally capable, the courts definitely would not enforce a contract which required the breaking laws. An agreement that performs illegal acts will not enforce by courts. Therefore, a contract must be made by the parties who are able to create or make a legally contract and to be considered as lawfully enforceable plus the activities specified in the contract must not be go against the law.

1.3 Conclusion

A contract is an agreement or promise made by two or more parties that the courts will enforce. A contract is valid when the offer is accepted. Valid contracts may be establish either in writing or verbally. Written contracts is known as a black and white contract which means write or typed in using alphabet words. Whereas verbal contract is known as oral contract which means make a contract by spoken words.

The main elements constituting a valid contract include of an offer, consideration, acceptance, capacity and legality. These elements are very important because if any of the elements are missing, the courts would consider the contract is unenforceable. A legal offer and its consideration must be unmistakably accepted by another party before the contract turns into an existence. A contract must be made by parties who are legally able to make a contract and to be considered as legally enforceable by courts.