Understand the essential elements of a valid contract in a business Essay

Understand the essential elements of a valid contract in a business context - Essay Example Some terms are fundamental whilst others are incidental. Fundamental terms are core components of a contract which form the very essence of a contract. In L Schuler AG v Wickman Machine Tool Sales Ltd1 it was held that conditions are the fundamental terms of a contract. They determine the very essence of the contract. The breach of a condition leads to the repudiation of the contract by the aggrieved party. In other words when the conditions are breached, the party that is unsatisfied is free to walk out of the contract because the contract was non-existent in the first place. Aside the core terms of a contract, there are other incidental promises that are meant to make the contract meaningful. In Chanter V Hopkins2 the judge held that â€Å"... a warranty is an express or implied statement of something which the party indicates shall be part of the contract and though part of the contract, yet collateral to the express object of it.† Albert Thomas proposal seeks to provide parking services for cars of individuals that are traveling via the nearby airport and will like to leave their cars. This is a service that creates some kind of contract between Albert Thomas and the customers that will use the parking lot. Thus the contract must have conditions and warranties. Condition: The condition will involve the provision of a space within which customers can park their cars. This parking space is meant to provide safe parking for the cars that will be brought by customers. Although these terms and conditions are important, there is the need to come up with certain important clauses to set the parameters within which Thomas can provide the services without incurring excessive liabilities. Also, these clauses will reduce ambiguity between Mr. Thomas and his customers. They include Penalty Clause, Exclusion Clauses and Exemption Clauses. The Penalty Clauses will identify certain penalties