LEARNINGS .: 1 1St Module - Law of Contract

LEARNINGS.
Definition and nature of contract Offer and acceptance Consideration Capacity of parties Free consent Quasi contracts Legality of object Performance of contracts Discharge of contract Remedies for breach of contract
1ST MODULE - LAW OF CONTRACT 1
Scope of the Act

Passed and implemented to control commercial and business contracts Not a complete code, but amended General principles of law of contract and special contract Came into force on 1st September 1872 Applicable to whole of India except Jammu and Kashmir Provides jus in personam right to a contracting party to claim against another but not right in rem. Provides only rules and regulations, but not rights and liabilities between parties
LAW OF CONTRACT
Definitions: 1. Law is the body of principles recognized and applied by the state in the administration of justice - SALMOND 2. Rule of external human actions enforced by sovereign political authority - HOLLAND Law wider subject concerns with civil, criminal, administrative, constitutional, business, labour laws etc.,
Law of contract
Important and basic part of business law Foundation for many other laws Not only for a trader but for every person in society.
Ex: buys a computer, takes a credit card, gives loan, booking for orchestra etc.,
It concerns with three questions:

1. 2. 3. Is there an agreement? Can the parties to such agreement enforce it in a court of law How they can enforce it?
1ST MODULE - LAW OF CONTRACT
HISTORY OF ICA
Came into force from September 1, 1872. Applicable to whole of India, except the state of J & K Originally with 266 sections dividend into following groups:
General principles 1 -75 Sections Contracts relating to sale of goods 76 124 Special kinds of contracts( indemnity, guarantee, bailment and plege) 125 138 The sections were revised and 2 new acts were enacted for the same 1. Sale of goods Act, 1930 2. Partinership Act, 1932
Definition of Contract. Contract is an agreement creating and defining obligations between the
parties SALMOND An agreement between two or more persons which is intended to be enforceable at law and is constituted by the acceptance by one party of an offer made to him by the other party to do or to abstain from doing some act - HALSBURY
Section 2 (h) defines a contract as an agreement enforceable by law thus to make a contract there must be
1. 2. 3. 4. An agreement The agreement shall be enforceable by law. All agreements are not enforceable by law All agreements are not contracts.
CONTRACT = An agreement + Enforceable by law
Agreement
According to Section 2(e) an agreement is defined as every promise and every set of promises forming the consideration for each other. A promise is defined as an accepted proposal as Section 2(b) says a proposal when accepted becomes a promise Therefore it can be said that an agreement is an accepted proposal. In an agreement there is a promise from both the sides. For example, A promises to deliver his Television to B and in return B promises to pay a sum of Rs. 5000 to A , there is said to be an agreement between A and B
AGREEMENT
3 ingredients AGREEMENT = Promise + reciprocal promise + Consideration Common acceptance formed and communicated between the two parties must create legal relations and not merely the relations which are purely social or domestic in nature.
Ex: Mr A invites Mr B to a dinner at his house. Mr. Vijay accepts the invitation. It is purely social agreement. If Mr. B fails to arrive at the dinner/ Mr A is not available at his place at dinner time. Either of the parties can not sue other for not fulfilling promise, there was no intention between two parties to create any legal oblilgaiton.
Types of agreements
1. Un-enforceable agreements: not going to court of law 2. Enforceable agreements: party has a right to approach a law court to get the agreement enforced.
An agreement is regarded as a contract when it is enforceable by law.

In other words, an agreement that the law will enforce is a contract. The conditions of enforceability are stated in Section 10. According to this section all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
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PROMISE 2 (b)
A proposal when accepted becomes a promise PROMISE = Proposal by one person and its acceptance by another person
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Proposal of offer
The term proposal has been defined in section 2(a) as follows: When one person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.
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The willingness to do or abstain from doing something, i.e. the proposal or offer must be made with a view to obtain the assent of the other party thereto. For example, As willingness to sell his TV set to B for Rs. 5000 if B accepts to purchase the same, amounts to proposal by A for the sale of the TV set. But if a statement is made without any intention to obtain the assent of the other party thereto that cannot be termed as proposal.
PARTIES TO AGREEMENT/CONTRACT
2 PARTIES PROMISOR : a person making the proposal (offer) offerer, proposer PROMISEE: a person accepting the proposal offeree, Acceptor
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DIFFERENCES
Agreement 1. Promise or set of promises forming consideration 2. All agreements are not contracts 3. May or may not enforceable 4. It does not always grant right Contract 1. Agreement enforceable by law 2. All contracts are agreements 3. Always enforceable 4. It always grant right
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CONTRACT SHOULD BE
At least two parties: one party under an obligation and other party entitled to enforce that obligation Obligation in respect of doing or abstaining from doing It must relate to legal matters and not to social affairs
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Essentials of a valid contract

1. Offer and Acceptance:The agreement should be between two parties. An agreement is the result of a proposal or offer by one party followed by its acceptance by the other. It should be lawful. 2. Intention to create legal relationship: 3. There should be a lawful consideration and lawful object in respect of that agreement. 4. There should be free consent of the parties, when they enter into the agreement. Consensus-ad-idem (Meeting of minds) i.e., persons must agree to the same thing in the same sense and at the same time. Sec 13: two or more person are said to concent when they are agree upon the samething in the same sense 5. Lawful object: purposes not illegal, immoral and opposed to public, injury to other persons, fraudulent
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Contd
6. The agreement should be between the parties who are competent to contract.
Minor, unsound mine, persons disqualified by law 7.The agreement must not be one, which has been declared to be void.: illegal by the law of a country
8. Certainity of meaning: terms should be certain, unambiguous not vague. Ex: sale and purchase of 100 tonnes of oil. But which oil? Thus, agreement being uncertain not valid. But, if the seller deals only in one kind of oil and one variety, then it shall be valid since it is capable of being made certain. 9.Possibility to perform: acts should be possible in itself physically and legally
10. Legal formalities: stamped, written, registered, statutory requirements.
Kinds of Contracts
From the point of view of Enforceability/Validity Valid contract Void contract Void agreement Voidable contract Unenforceable contract Illegal Agreements
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LEARNINGS.

Scope of the Act

It concerns with three questions:

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

CONTRACT = An agreement + Enforceable by law

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

An agreement is regarded as a contract when it is enforceable by law.

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

Essentials of a valid contract

1ST MODULE - LAW OF CONTRACT

1ST MODULE - LAW OF CONTRACT

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