Quick questions on The essential elements of a valid contract: QCE Legal Studies

For a legally binding contract to exist, five elements must be present.

Even where the five elements are present, a contract may be challenged where consent was not genuine, for example because of misrepresentation, mistake, duress, or undue influence. The Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) also prohibits misleading or deceptive conduct (s 18) and unconscionable conduct, which can affect the enforceability of consumer contracts.

A clear proposal made by one party (the offeror) to another (the offeree), capable of being accepted. An offer must be distinguished from an invitation to treat, which is merely an invitation for others to make offers. Goods displayed in a shop window or on a shelf are an invitation to treat, not an offer (Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401).

Unqualified agreement to all the terms of the offer. Acceptance must be communicated to the offeror and must mirror the offer. A response that changes the terms is a counter-offer, which destroys the original offer (Hyde v Wrench (1840) 49 ER 132).

Something of value exchanged by each party (the "price" of the promise). Consideration must be sufficient but need not be adequate (the courts do not assess whether the bargain was a good one). Past consideration is generally not valid consideration.

The parties must intend the agreement to be legally binding. There is a rebuttable presumption that commercial agreements are intended to be binding, and a rebuttable presumption that purely social or domestic agreements are not (Balfour v Balfour [1919] 2 KB 571).

The parties must have legal capacity to contract. Certain categories of person have limited capacity, including minors, people who lack mental capacity, and intoxicated persons. Contracts with minors are generally voidable, except for contracts for necessaries.

List the five essential elements of a valid contract. [5 marks]

Distinguish between an offer and an invitation to treat, using a case to support your answer. [3 marks]

Explain how the presumption about intention to create legal relations differs between commercial and domestic agreements. [4 marks]