Introduction: A contract is described as "an agreement giving rise to obligations enforced or recognised by law" (Doolan, 2003), he continues to describe that a contract exists "when legally capable persons have reached agreement, or where the law considers them to have reached agreement" Doolan also illustrates that "The Law of Contract concerns itself with all contracts. Not alone does it apply to contracts worth considerable sums of money, but the same rules govern simple contracts, such as the purchase of a newspaper, having a haircut or taking a bus journey" (Doolan, 2003).
A contract in itself doe not have to be exclusively a written agreement but it can take the form of verbal or inferred agreement. These are the three forms of contract. An inferred contract occurs where one party infers an offer and another party infers acceptance. For example, a person buying a newspaper in shop would infer that he wants to go into a contract by handing over the price of the paper. He would not explicitly indicate that he wants to go into a contract. The Shop assistant would infer acceptance of the offer by taking the money.
There are three essential ingredients to a contract. They are (i)An Agreement. The first essential element of a contract is that both parties understand and realise that there is an agreement of terms and conditions in order for the contract to arise. (ii)An Intention to be bound by contract. That both parties know that they are to be willingly bound by contract. (iii)Consideration. Consideration is "to be successful in an action of a contract, it must be proven that one party gave, or promised to give, some advantage to the other party in return for the latter's promise.
This advantage moving from one party to the other party is known in law as consideration" (Doolan, 2003). In other words their must be some form of benefit passed from one party to the other to make the contract valid. For example Barings bank was bought for a dollar by a Dutch bank but the acquiring bank took on their vast debts. They had to pay the dollar in order for the contract to be valid. Within the real estate industry the Law of Contract plays a very vital role.
This assignment will illustrate the importance and nature of contract law relevant to an Auctioneers agency. Also the author shall discuss the structural elements of a standard contract of sale. As property deals with such large amounts of money, the Law of Contract needs to be strictly adhered to. This need emphasises the industries obligation to maintain a best practises code. On the failure of these best practises and elements of the contract being contravened we will discuss remedies available for breach of contract.