Law of Contract

LAW OF CONTRACT

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Introduction

·       Every agreement and promise enforceable at law is called a Contract

·       Enforceability of an agreement means that it is recognized by the court and create legal obligations between the parties

·       Contract = Agreement + Enforceability

·       Agreement = Offer + Acceptance

 

Essentials of a Valid Contract

·       Offer & Acceptance

o   Abdulla refers to sell his helicopter to Simran for Rs 50000000, This is an offer

o   If Simran accepts this offer there is an acceptance

·       Legal Obligation

o   If one party does not fulfil his promise, he shall be liable for of contract

·       Lawful Consideration

o   Something given and taken is called consideration

o   Abdulla promise to sell his car to Simran for Rs 500000

o   For Abdulla Rs 500000is consideration and for Simran car is the consideration

·       Capacity of Parties

o   An agreement is enforceable if it is made by the parties who are competent for the contract

·       Free Consent

o   Consent of parties must be free and not obtained by

§  Force

§  Fraud

§  Undue Influence

·       Lawful Objects

o   The object of the contract must not be

§  Illegal

§  Immoral

§  Opposed to public policy

·       Written

o   The contract must be in written format for the clarity of obligations of both the parties

·       Certainty of Terms

o   Terms and conditions of the contract must be

§  Clear

§  Complete

§  Certain

·       Possibility of Performance

o   Contract must be capable of being performed

o   Abdulla agrees with Simran to discover the treasure of ALI BABA by magic, this agreement is not enforceable

 

Types of Contract

1.   According to Enforceability

a.     Valid Contract (Enforceable by law)

b.     Void Contract (Not enforceable by law)

c.      Void Agreement (Agreement not enforceable by law)

d.     Unenforceable Contract (Contract which cannot be enforced in a court because of some technical defect & faults such as absence of writing, stamp, registration etc.)

e.     Illegal Agreement (When its performance is forbidden by any law)

2.   According to Formation

a.     Express Contract (Expressed in words)

b.     Implied Contract (Arise from conduct of parties (Abdulla went to a restaurant and had a cup of tea. It is implied that Abdulla will pay for the Tea)

c.      Quasi Contract (Law imposes under some special circumstances)

3.   According to Performance

a.     Executed (When both parties have completely performed their obligations)

b.     Executory (Something remains to be done)

4.   According to Parties

a.     Unilateral (Only one party has commitment)

b.     Bilateral (Both parties are bounded to perform their duties)

 

Discharge Modes of a Contract

·       By Performance

·       By Mutual Agreement

·       By Impossibility of Performance

·       By Operation of Law

·       By Breach

 

Video Description

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