CONTRACT
According to sec 2(h) of the Indian Contract Act, 1872
defines a contract as an “agreement
enforceable by law”.
Basically, a contract is an exchange of promises. It is formed by two or more persons. It is
initiated by one party by offering sth to the other party. If the other party
accepts the offer in full then it becomes an agreement.
When such agreement fulfils
the conditions of section 10 of the Indian Contract Act, then it becomes the
contract.
Contract= Agreement+
Enforceability
AGREEMENT: Legally, the agreement consists of one party
offer to enter into an contract and the other party acceptance of the terms of
the offer. Sec 2(e) defines agreement as,”Every promise and every set of
promises, forming consideration for each other”.
Promise: Sec 2(b) defines promise as,” when the person
to whom the proposal is made signifies his assent theretothe proposal is said
to be accepted. Proposal when accepted
becomes a promise.”
Agreement=
Offer+ Acceptance
For eg. A invites his friend B to a
dinner and B accepts the invitation. If B fails to go for dinner due to some
personal reason then A cannot go to the court to claim his loss.
ENFORCEABILITY: An agreement is said to be
enforceable by law if it creates some legal obligations on both the parties. In
other words, both the parties are bound to perform their promises and if they
fail they must sent to the court.
For eg. A agrees to sell his car to
B for Rs 100000. And B is ready to pay for the car Rs 100000.But if A does not
deliver the car to B on time then B can go to the court and file a suit against
A for non performance of the promise on the part of A.
VALID
CONTRACT AND ITS ELEMENTS
ESSENTIALS
OF A VALID CONTRACT: For
an agreement to become a contract; it must satisfies the following conditions:
1. Agreement: Offer by one party,
and the acceptance by other party. For
eg. If mohan makes a proposal to sell his car to sohan for Rs 10000 and
sohan accepts the proposal then there will be valid agreement b/w the parties.
2. Consensus Of Item: Consensus an item
means that both the parties agree on the same thing in the same sense.
3. Legal Relationship: It arises when both
the parties know that they would be attended by legal consequences if they
default. For eg. Go for a dinner to
friends house.
4. Lawful Consideration: Consideration means
"Something in return". For a valid contract, consideration must be
lawful. For example, A agrees to
sell his house to B for Rs.500,000. Here, for A, the consideration is
Rs.500,000 and for B, the consideration is House.
5. Capacity Of Parties: Parties must be
competent to contract, that is, any party must not a minor, detain person etc.
It means he should not be less than 18 yrs and should be of sound mind and
should not be disqualified from any contract ever.
6. Free Consent: Consent must be free,
that is, it must not caused by coercion, mis-representation, fraud, undue
influence etc. For eg. A wants to
sell his fiat car to B for Rs 50000, and B accepts the propoasal of A but
thinks that it is a maruti car .Hence, there is a proposal b/w both the parties
but there is a diff b/w the concepts of A and B so there cannot be any
agreement.
7. Lawful Object: The object of
contract must not be:
§
Illegal or unlawful
§
Immoral
§
Opposed to public policy
8. Contract must be certain
and capable of being performed. For eg.
It must not promise impossible things like injecting a new life in a dead body
.
9. Appropriate legal
formalities must be performed like writing, registration, witnesses,
attestation etc.
TYPES OF CONTRACT
1.
ON THE BASIS OF
ENFORCEABILITY:
a) Valid Contract: If it fulfil all the essential conditions
of a contract given under sec 10. It must be enforceable by law.
b) Void Contract: sec
2(j), “ Is a contract without any legal effect and cannot be enforced by
law.” For eg. In the case of Mohiri Bibi vs Dharmodas Ghosh, who is a minor and Mohiri bibi husband has
given him loan. When Mohiri bibi husband died, she demanded loan back from
Dharmodas but he denied. The court ruled that since he was the minor at that
time so the contract is void. So he is not liable to pay the loan.
c) Voidable Contract: Sec 2(i), “ An agreement which is
enforceable by law at the option of one or more parties but not at the option
of others party “. For eg. A
contract made under coercion, fraud etc. If A says to B that he will kill his
family if he does not pay the money asked by him so this a voidable contract.
d) Unenforceable Contract: Where a contract is good in matter but
because of some technical defect i.e absence in writing etc. is called
unenforceable contract.
2.
ON THE BASIS OF FORMATION:
a) Express Contract: When the contract has made in an express
manner by use of words, spoken or written .For
eg. A says to B that “will you buy my car for Rs 100000 and B says that “
Yes i m ready to buy your car” then it is a express contract made orally.
b) Implied Contract: where the offer and acceptance is made not
by words but by conduct only from the circumstances. For eg. If a person enters into a train then it shows that he will
pay the fair .
3.
ON THE BASIS OF
PERFORMANCE:
a) Executed Contract: where both the parties have done their
respective work. For eg. A buys a
book from a shopkeeper for Rs 100 then
A pays the amt to the shopkeeper and in return he gets the book . So nothing
has remained to be performed.
b) Executory Contract: where one or both the
parties have yet to perform their work in future. For eg. A buys goods from B and promises to pay him in future.
VOID AGREEMENT
An agreement which is not enforceable by law
called void agreement. For eg. Minor
agreement, without consideration etc.
AGREEMENT
DECLARED AS VOID
1.
Agreement by a minor or a
person of unsound mind (sec 11)
2. Agreement made under a bilateral mistake of fact material
to the agreement (sec 20): when both the parties misunderstood each other.
3. Agreement of which consideration is unlawful(sec 23): For eg.
Agreement forbidden by law, fraud, involves injury to a person or property of
other person etc.
4. Agreement without consideration (sec25): considered void unless it is in writing or registered.
5. Agreements by way of wager( sec 30): The wager means betting or
gambling .It is a agreement b/w two persons under which money is payable by one
person on happening or non-happening of any event to other person.
6. Agreements to do impossible acts( sec 56): For eg imposing new life to dead
body.
7. Agreement in restraint of marriage(sec26): Every contract
restraining marriage except minor is void because everyone has a full right of
marriage.
8. Reciprocal promises( sec 57): where persons
reciprocally promise, firstly to do certain things which are legal and secondly
do certain things which are illegal so the first set of promises is a contract
and the second one is void. For eg.
A and B agree that A will sell a car to B for Rs 100000 but if B uses it as a
gambling car then he shall pay R150000. So the first promise is a contract but
second one is void because it is related to unlawful practices.
