Topic of Interest Related to Business Law Essay

Topic of Interest Related to Business Law - Essay Example An agreement, which creates or has the intention to create a legal obligation, is a contract (Bays., 1920). Capacity to enter into a contract is the legal capability to enter into a contract. This means that an adult who is of sound mind can enter into a contract. Minors, mentally incapable persons and those who are drunk do not have the capacity to enter into a contract. Law says that when people enter into a contract then they should have the ability to know and understand the terms of a contract (Beatty, & Samuelson, 2006). Offer and acceptance according to law is meeting of the minds or 'concurrence of wills' or 'ad idem'. Normally for a contract to be effective must have an offer and an acceptance of that offer. The vital characteristics of a contract are that a person makes an offer with another accepting it. Offer and acceptance need not be always expressed orally or in writing, it can be implied also. The term of a contract if not expressed in words is an implied contract. If obligations are only forced on one party by virtue of acceptance to perform then such contracts are known as unilateral contracts. This was enunciated in the case of Carlill v. Carbolic Smoke Ball Co. (McKendrick, 2005) Consideration is the vital idea in the law of contracts and is necessary, in the majority cases, for a contract to be enforceable. ... 4. Consideration Consideration is the vital idea in the law of contracts and is necessary, in the majority cases, for a contract to be enforceable. Consideration is the price, which one has to pay for the promise of another. Consideration can be in the form of money, property, the doing of an act, or even refraining from doing an act and a promise. It means that if one accords to do something he was not otherwise legally compelled to do, then it means that he has given consideration. For instance, "Jack agrees to sell his car to Jill for $100. Jill's payment of $100 (or her promise to do so) is the consideration for Jack's promise to give Jill the car" (William Theophilus, 1912). Classification of Contracts For the sake of analysis, contracts can be classified in many different ways. The most general classifications of contracts are; "express" and "implied" contracts; "void" and "voidable" contracts; and "enforceable" and "unenforceable" contracts. Express and Implied Contracts If the terms of a contract are stated clearly, then such contracts are known as Express contracts. Express contracts may be written or oral. For instance when a valid offer is acknowledged, then it means that an express contract has been created. Implied contracts are generally referred to as "implied in fact." If the specifics of the transaction is not directly negotiated but are make know by the behavior of the parties then such contracts are implied. For example making an appointment with a repairman to have a broken washing machine fixed is an implied contract (http://law.jrank.org/pages/12504/ Contract-Law.html#ixzz0Uy1JwCUw accessed on October 25, 2009). The expression "implied in fact" is used to differentiate implicit arrangement from an

Economics Essay Example | Topics and Well Written Essays - 1500 words - 1

Economics - Essay Example Marshallian utility analysis is based on the assumption that utility is measurable and indifference curve analysis is based on the assumption that the consumer is able to tell his preferences among the various alternative combinations of the two commodities. These assumptions seem to be unrealistic and revealed preference theory is free from these unrealistic assumptions and it seeks to enunciate the demand from observed market behaviour of the consumer. The theory is based on the fact that ‘choice reveals preference’. 2. Critical Analysis of the Neo Classical consumption theories of Marshallian Utility analysis and Hicksian Indifference analysis 1) Unrealistic The Marshallian assumption of cardinal measurement of utility is very restrictive. It demands too much from the human mind. Utility is a mental phenomenon and the precision in the measurement of utility assumed by Marshall is unrealistic. It is criticised that new theory of indifference analysis only jumps from th e frying pan of the difficulty of measuring utility into the fire of the unreality of assuming consumer’s complete knowledge of all his scales of preferences or indifference map. The indifference curve technique envisages a consumer who thinks of innumerable possible combinations of goods and his relative preferences for them. 2) Absurd Indifference curves include even the most ridiculous combinations which may be far removed from a consumer’s habitual combinations. For example, while it may be perfectly sensible to compare whether three pairs of shoes and six shirts would give him as much satisfaction as two pairs of shoes and seven shirts. 3) Introspective Both the approaches of Marshallian Utility analysis and indiffence curve technique are based on the psychological or introspective method. The law of diminishing marginal utility, which is psychological in nature lies at the bottom of law of demand. Indifference curve too is based on introspection. This technique i s criticised as introspective and hence Samuelson introduced behaviourist method of devising demand theory. 4) Relation of Transitivity objected Armstrong has criticised the relation of transitivity involved in indifference curve technique. According to him, the consumer’s indifference arises from his inability to perceive the difference between alternative combinations of goods. This is due to the fact that the difference is too slight to be noticed. If that is true, the relation of indifference become non-trasitive. This knocks the bottom out of the whole system of indifference curve analysis. 5) Limited empirical Nature In Hicks-Allen theory, indifference curves are based on hypothetical experimentation. They are based on imaginary indifference curves, although attempts have been made recently to derive them experimentally. 4. Revealed Preference Theory The theory of Revealed Preference is associated with the name of Paul Samuelson and the theory is called the behaviourist ordinal utility theory. Instead of the unrealistic assumptions that the consumers operate with a complete and consistent scales of preferences set out in the form of indifference curves, most economists now prefer to analyse situations in which their hypothesis can be tested. Both