Mutual Assent, Valid Offer & Capacity

Can you please explain these three terms for me?

Perspective and terminology

·      Our perspective for the following descriptions

·         Will be that of the owner, sponsor or performing organization

·      Since these are not necessarily all the same

·         We will use the all-encompassing term

·         "Acquirer"

·         I.e. the one who initiates the contracting process

·      Similarly

·         We will refer to the respondent as

·         "Supplier"

·         Whether of goods, services, or both

Mutual assent

·      The principle of mutual assent means that

·         An offer by a supplier to an acquirer

·         Represents a proposal to enter into a contract

·         With that acquirer

·      Such an offer is typically, though not necessarily

·         In response to a request for proposal

·         Or request for tender

·         From the acquirer

A valid offer

·      A valid offer generally has several basic elements

1. There must be genuine intent to contract

2. It must be communicated to the acquirer
3. It must be certain and definitive in its terms and conditions

·      And, as we said earlier

4. Both parties must be free of duress one from another

·         I.e. the contract can be entered into voluntarily

·      If these conditions are not met

·         All or part of the contract may be invalid

Lawful objective

·      Hardly surprising

·         A contract whose purpose violates the prevailing law

·         I.e. involves unlawful activity

·         Is legally void and unenforceable

·      Not only that

·         But the perpetrators who attempt it

·         Could well end up in jail!

Capacity to perform

·      Both acquirer and supplier

·         Must have the legal capacity to perform

·         I.e. clearly capable of performing their respective roles and responsibilities

·      However

·         It may be difficult to prove the contrary in practice

·         And the actions, or inactions of the project director or project manager

·         Can have a profound influence on the contractual relationships

·         And hence affect the effort, progress and cost of the work of the contract