This document provides an overview of contract law in Nepal and India. It defines key concepts like contract, agreement, proposal, and acceptance. It outlines the essential elements for a valid contract and discusses different types of contracts. It also explains the differences between void, voidable, and valid contracts. Specifically, it notes that void contracts are not enforceable by law, voidable contracts can be enforced or avoided at the option of one party, and valid contracts create enforceable legal obligations between two or more parties.
This document provides an overview of contract law in Nepal and India. It defines key concepts like contract, agreement, proposal, and acceptance. It outlines the essential elements for a valid contract and discusses different types of contracts. It also explains the differences between void, voidable, and valid contracts. Specifically, it notes that void contracts are not enforceable by law, voidable contracts can be enforced or avoided at the option of one party, and valid contracts create enforceable legal obligations between two or more parties.
This document provides an overview of contract law in Nepal and India. It defines key concepts like contract, agreement, proposal, and acceptance. It outlines the essential elements for a valid contract and discusses different types of contracts. It also explains the differences between void, voidable, and valid contracts. Specifically, it notes that void contracts are not enforceable by law, voidable contracts can be enforced or avoided at the option of one party, and valid contracts create enforceable legal obligations between two or more parties.
This document provides an overview of contract law in Nepal and India. It defines key concepts like contract, agreement, proposal, and acceptance. It outlines the essential elements for a valid contract and discusses different types of contracts. It also explains the differences between void, voidable, and valid contracts. Specifically, it notes that void contracts are not enforceable by law, voidable contracts can be enforced or avoided at the option of one party, and valid contracts create enforceable legal obligations between two or more parties.
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Law of contract
Nishan Poudel
Introduction It is the foundation upon which superstructure of modern business is built i.e it is a basis of business. Every business activity is determined and guided by the agreement of the parties,concerned. Law of contract lays down the general rules relating to promises, their formation, performance, and their enforceability. The law of contract not apply to the business community, but also to others. Law of contract furnishes the basis for the other branches of Mercantile Law sale of goods, insurance, partnership, insolvency etc.
Definitions Nepal Contract Act section 2(e)- Contract is defined as an agreement concluded between two or more parties for performing or not performing any work. Indian Contract Act section 2(h) - An agreement enforceable by law is contract. We can conclude the main points of law of contracts as:
An agreement to do or not to do any action on ground of consent
Enforceability of the liabilities by law Two or more parties Rights and liabilities created reciprocally between concerned parties.
Importance of Law of Contract
in Business
Obligations of parties are enforceable by law.
Ensures legal relationship between parties. Has sufficient provisions for attainment of their purpose. Protects rights and creates duties for contracting parties. Provides alternative remedy if things go wrong.
Agreement every promise or set of promises
forming the consideration for each other. Promise when a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. When proposal is accepted, it becomes promise. Proposal - it is defined as a proposal put forward by one person to another, with the expectation of obtaining his consent for performing or not performing any work
Contract Agreement
Busines s
Social
Legal Obligation
Domestic
Essential Elements for a Valid Contract
1. 2. 3.
4. 5. 6. 7. 8. 9. 10.
Two or More parties.
Offer and acceptance Intention to create a legal relation (balfour vs balfour) .examples to be dicussed Lawful consideration Capacity of parties Free and Genuine consent Lawful object Certainty (not vauge) Possibility of performance Not expressly declared void
Difference between agreement
and contract
Agreement
Combination
of offer and acceptance is agreement. It may of may not create legal obligations Doesnt attract law of contract The essential elements of contract are not necessary
Contract
All
agreements enforceable by law are contracts It must create a legal obligation. Attracts law of contract All necessary elements to contract are necessary.
Expressed contract Implied contract Indirect or Quasi contract Form
point of view of Performance
Executed contract Executory contract Form
point of view of Liability
Unilateral contract Bilateral contract
Void Agreement (S. 13)
Void = not binding (not enforceable by law)
Expressly declared void contract
Agreement in restraint of marriage (other than
minor) Agreement in restraint of trade Exception: Sale of goodwill Partners agreement trade combination (between trader and manufacture not to sale goods below certain price is valid) negative stipulation in service agreements
Contd
Agreement in restraint of legal proceedings
Agreement against prevailing law Uncertain, impossible, vague agreements Contract preventing from enjoying the facilities already enjoyed by the general public. Contract for immoral purpose or opposed to the public policy. Contract by incompetent person Contract for unlawful consideration or objective.
Void Contract
When valid contract becomes void contract?
A contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable by law Supervening impossibility Subsequent illegality Repudiation of voidable contract In case of contingent contract, if contingent event becomes impossible.
Voidable Contract (S.14)
An agreement which is enforceable by law at the option of one or more party thereto, but not at the option of other. Usually contracts becomes voidable when consent of the party is obtained by
coercion, undue influence, fraud, or deceit.
Coercion
If any person does any of the following act
with an intention of compelling any person to accept any contract against him/her Withheld or threaten to withhold property Threaten to defame him/her Takes or threaten to take any action against prevailing law.
Undue Influence The relation subsisting between the parties are such that one party is in a position to dominate the will of another party and that party use his position to dominate latter's will. Following person is deemed to be under the influence
Person living his/her guardianship or custody.
Who cannot take care of their interest temporarily or permanently by reason of old age, sickness or physical or mental weakness. Who can be subjected to under ones economic or ranking influences.
Fraud
If any party, with an intention to cheat other
party, does any of the following things Leads or takes other party or his agent to believe a particular matter is true though that matter is not true, or Suppresses any information in his possession, or Commit any act against the prevailing law
Deceit Submission of false information, (unintentional) Mislead any party so as to aggrieve another party Causing any wrong on the matter of contract.
Consequences of Voidable Contract Aggrieved party can make the contract void. Aggrieved party may demand his position to be the same
