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CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance

Nisha agrees to accompany her friend Tara to a film on Sunday, and Tara agrees to buy the tickets. Tara forgets and no tickets are bought. Nisha wants to sue for compensation. Which statement is correct?

Nisha fails because a casual social arrangement between friends lacks the intention to create legal relations. Without that element the agreement is not enforceable by law, so it is not a contract, even though a promise and acceptance exist.

  1. ANisha succeeds, because there was an offer and acceptance
  2. BNisha succeeds, because Tara made a promise
  3. CNisha fails, because the parties did not intend to create legal relationsCorrect
  4. DNisha fails, because the agreement was not in writing

Explanation

Social agreements between friends are normally not meant to create legal obligations. Without intention to create legal relations, the agreement is not enforceable by law and is not a contract. Writing is not required to make such an agreement valid.

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