Hospitality Industry, a Contract Is an Agreement or Promise

In hospitality industry, a contract is an agreement or promise made between two or more parties that the courts will enforce. In other words, it is a set of rules governing the relationship, content and validity of an agreement between two or more persons. Normally, it is related to the sale of goods, provision or services or exchange of interests or ownership. A valid contract can be considered as the moment that the offer is accepted. For example, you have been agreed to purchase with someone”s old cupboard for RM150, that is mean you have a valid contract. Once you paid to them and they give you the cupboard which means the contract is complete. In general, a valid contract may be established either in writing or verbally. That is mean it can be a verbal form of contract, and it also can be a written form of contract. A verbal contract is any contract which is expressed in words by spoken. While for the written contract, it is a contract generally refers to a written document outlining an agreement. More often than not, it is usually a good idea to have a written contract if a transaction that is worth more than a limit.

1.2 Main Elements Constituting a Valid Contract

Some specific elements that must be included in all contracts, whether verbal or written contract, to make them legally enforceable in a court of law. The court will consider the contract as an unenforceable agreement if any one of the elements is missing. In order to make a contract enforceable, it must be legally valid. Therefore, the contract must consist of the essential elements which are legality, offer, consideration, acceptance, and capacity.

a. Legality

– Legality is very important to make a contract. The contract will become unenforceable if it is illegal or invalid. It is not for all agreements or promises made between two or more parties are legally valid. In order to make a legality of contract, it should consist of offer, consideration, acceptance, and capacity. Therefore, have to consider all of these elements before making a contract. It is including consideration of age, consideration of mental problem, and consideration of activity involved. For example, the person who makes the contract must reach a minimum age. Only then he or she can legally commit to the promises made in the contract. The court will consider a contract is unenforceable if it is made by the minor because the minor do not meet the minimum age requirement. Besides that, the person who has the mental problem also will not be able to enter into an enforceable contract. In addition, any contract that requires the breaking of a law, it must not consider as enforceable contract by the court. Even that person is meeting the legally capable. Thus, only the contract which is made by person who are legally able to contract, and the activities involved in the contract comply with the law can be considered legally enforceable.

b. Offer

– In a contract, it is involves two or more parties are legally capable. Besides that, it is also involves a legal activity. An offer is another element required in a legally enforceable contract. The definition for an offer is an expression of willingness to contract on a specific set of terms. Sometimes, specific instructions may include in the offer, such as how, where, when, and to whom the offer is made. Not only that, time frames or deadline for acceptance may also include in the offer. Generally, the price or terms of the offer will also be included to making the offer more detailed. For example, in a contract for the sale of an old TV, the seller may offer the Old TV to the buyer for RM500. The contract offer could be stated as ”Call for confirmation if you are interested.” Therefore, the old TV will goes to the person who willing to pay for RM500 and have been call up seller to make a confirmation. The seller would not sell the old TV to the person who does not call back. It is very important for you to read through the offers by the seller before you making a transaction.

c. Consideration

– Consideration is an important part of the contract. It can be viewed as the concept of legal value in relation with contracts. In other words, it is the payment or cost promise given by one party in return for the promises of another party when making a contract. Consideration may be something other than money. It might be physical objects, services, promised actions, and others. As a general rule, an agreement will become void if without consideration. Not only that, the consideration must flow both ways in order to make a contract to be valid. For example, party A offers his car for RM3500 to anyone which is interested. Party B has interested in his car and agrees with pay for RM3500. Therefore, party B signs a contract to buy a car from party A. In this case, we can see that the consideration of party A is the car, while the consideration of party B is the RM3500. Furthermore, it is another type of consideration usually employed in the hospitality industry which is the temporary or permanent use of hotel property. For example, a hotel offers a specific rate for the rental of room to the guest, so the rate is the consideration of the hotel to be exchanged for the overnight use of the room by the guest.

d. Acceptance

– It must consist of an offer, a consideration, and an acceptance in a contract. Acceptance is at the moment that a contract exists. It is because a contract is created by at least two parties. Therefore, the second party must be clearly accepted of a legal offer and consideration to avoid misunderstanding. In order to make the contract become valid, so the second party must be accept exactly the terms of the offer. Normally, an offer may be accepted two ways, which are orally or in writing. Sometimes, the offer itself has specifies the manner of acceptance, so just follow whatever has been stated in the offer. Take the same case as the example. Party B signs a contract to buy a car from party A for RM3500. It is a necessary part of creating a binding contract for the sale of the car once the buyer”s acceptance of that offer. That is meant the buyer accepts the term and conditional made by the seller and agree with pay for RM3500.

e. Capacity

– As it was mentioned before, it is not for all agreements or promises made between two or more parties are legally valid. They have to consider the age of the parties before making a contract. That is the capacity in the contract. Capacity is the parties to the contract must have the legal capacity to do so. That is mean the person who makes the contract must reach a minimum age. Only then he or she can legally commit to the promises made in the contract. As a general rule, minors are referring as the people who are below the age of eighteen have no capacity to enter into contracts. That is why a contract made by the minor is considered as unenforceable by the court. It is because the minor do not meet the minimum age requirement. Besides that, it is not only for the person below the age of eighteen cannot enter into valid contracts. The insane persons or person with unsound minds is also the same. Since they cannot think rationally, so they cannot understand and cannot commit to the promises was made in the contract. A contract must consider about the capacity, only then can consider as an enforceable contract by the court.

1.3 Conclusion

A contract is an agreement or promise made between two or more parties that the courts will enforce. Generally, a valid contract only can be considered as the moment that the offer is accepted. It can be established by two types, either is verbal contract or written contract. Some specific elements that must be included in all contracts, whether verbal or written contract, to make them legally enforceable in a court of law. The elements that include in the contract are legality, offer, consideration, acceptance, and capacity. Only then the contract will become enforceable and legally valid. Based on this assignment we know that, it is not for all agreements or promises made between two or more parties are legally valid. Not only that, we also know about the basic common sense for the contract. For example, the people who are below the age of eighteen and insane persons or person with unsound minds have no capacity to enter into contracts.