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Contract Act
Contract Act
An
agreement is every Promise and every set of promises , forming consideration for each other.
If we analyze the above said things, we can find that a contract essentially consist of 2 elements 1.
Agreement 2.Its enforceability by Law
Examples:
The below said are few examples of contract which we enter in day to day life
Eg 1 :- when you travel in a bus, you enter into a contract with that bus company
Eg 2:- when you purchase a pen, you enter into contact with that vendor.
Even though the enforceability of law is less in these examples these are simple examples of Contract
.
Valid contract is the one which is enforceable by law. There are the various type of contract namely,
void contract, voidable contract, illegal contract, unenforceable contract and valid contract. The type
of the contract will be decided based on the legality of the contract. A Contract will be considered as
a valid contract when it satisfy certain essentials of a valid contract.
Their must be two parties . One must initiate the offer (offeror) and the other should accept it
(offeree or acceptor) .
The offer must be definite and the acceptance must be absolute and unconditional.
In all social agreements usually people do not intend legal relationship. However in business
agreements people intend to enter legal relationship.
E.g.. An invited B for his sister marriage and B accepts to attend the function. But B did not go to the
function . A cannot sue B as there is no legal agreement.
3) Lawful Consideration
Consideration is something in return means the benefit move from one party to another. Both should
give something and take something in return. It can be present past or future but it should be real
and lawful.
E.g.. If X agrees to sell his car to Y for Rs.100000 without any expectation for Y then there is no
consideration so not a Valid contract
Must be legal
Must be not something which he is already eligible ( e.g. Fees to the Lawyer)
In certain case the give exemption for certain contracts. In these contracts even though there is no
consideration for one one party, still it is considered as valid contract. Below discussed are some
examples for the rule no consideration no contract.
Charity
Own will
The laws have termed certain persons as incapable to enter into a contract . So the contract enters
with such persons are not valid.
Minor
Unsound mind
Drunken
Insolvent
Both the parties should agree the subject matter of the contract in the same sense and with the
same mind over all terms. If the consent given by the parties is not a consent given with free mind, If
it is obtained through force, using authority, giving false information etc then that consent is not
called as free and genuine consent. Such contract is also not a valid contract.
E.g. X has two laptops Sony and Acer with different configurations. B agrees to purchase one among
them While enter in to the contract X was Intend to sell Sony but B enters thinking that the
agreement is to sell Acer laptop. This is not a genuine contract as the subject matter was not
properly understood.
Consent of the party is considered as a free and genuine consent when it is not obtained through any
of the following:
Fraud
Misrepresentation
6) Lawful Object
The object of the contract should be legal moral and should not be against public policy (sec.23)
The agreement must not have been expressly declared void by law in force in the country ( sec . 24 to
30). An agreement which is not enforceable by Law is called Void Agreements.(sec 2 (9)). The
Agreements which are coming under any of the below said criteria then it is called as void
agreements.
Agreement in which the consideration or object is not lawful in part (Sec 24)
Wager Agreement (Sec 30):It is an agreement between two parties by which one party agrees to pay
money on the happening of some uncertain event in consideration of the other party’s promise to
pay if the event does not happen.
The meaning of the terms of contract must be definite and the performance or execution must be
certain and possible.
9) Legal formalities
A contract may either be in writing or oral. But for the interest of the parties a contract should be in
written. Sometimes it needs duly stamped or registered .