Present Law2003

8/4/2019 Present Law2003

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P R E S E N T E D B Y

A n j a n a P . T h a z h a k k a l ( R o l l n o : 3 )

A n j u C P ( R o l l n o : 4 )

DEFINITION OF A VALID CONTRACT &

ILLUSTRATING THE ESSENTIAL ELEMENTS &

TYPES OF CONTRACT


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DEFINITION OF CONTRACT

According to section 2(h) of the Indian Contract Act:

An agreement enforceable by law is a contract.

A contract therefore, is an agreement the object of which is to create

a legal obligation i.e., a duty enforceable by law.


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A contract essentiallyconsists of two elements:

(1) An agreement

(2) Legal obligation i.e., a duty detail.


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1. Agreement

As per section 2 (e): Every promise and every set of promises,

forming the consideration for each other, is an agreement.

On analyzing the above definition the following characteristics of anagreement become evident:

(a) At least two persons. There must be two or more persons to make

an agreement because one person cannot enter into an agreement

with himself.(b) Consensus-ad-idem. Both the parties to an agreement must agree

about the subject matter of the agreement in the same sense and at

the same time.


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2. Legal obligation

As stated above, an agreement to become a contract must give rise

to a legal obligation

i.e., a duty enforceable by law.


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Essential Elements of a Valid Contract1. Offer and acceptance.

2. Intention to create legal relations.

3. Lawful consideration.

4. Capacity of parties.

5. Free consent.

6. Lawful object.

7. Legal formalities

8. Certainty.

9. Possibility of performance.

10.Not expressly declared void.


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1. Offer and acceptance

There must a lawful offer and a lawful acceptance of the offer,

thus resulting in an agreement.


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2. Intention to create legal relations

There must be an intention among the parties that the agreement

should be attached by legal consequences and create legal

obligations.


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3. Lawful consideration.

Consideration has been defined as the price paid by one party for

the promise of the other.

An agreement is legally enforceable only when each of the parties

to it gives something and gets something.


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4. Capacity of parties

The parties to an agreement must be competent to contract.

The contracting parties must be of the age of majority and of

sound mind and must not be disqualified by any law to whichthey are subject (sec.11).


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5. Free consent

This concept has two aspects:

(1) consent should be made and(2) it should be free of any pressure or misunderstanding.

Consent means that the parties must have agreed upon the same

thing in the same sense (sec. 13).


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6. Lawful object

For the formation of a valid contract it is also necessary that

the parties to an agreement must agree for a lawful object.

The object for which the agreement has been entered into must

not be fraudulent or illegal or immoral or opposed to public

policy or must not imply injury to the person or the other of the

reasons mentioned above the agreement is void.


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7. Legal formalities

Legal formalities , if any required for particular agreement such

as registration, writing they must be followed.


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8. Certainty

In order to give rise to a valid contract the terms of the agreement

must not be vague or uncertain.

It must be possible to ascertain the meaning of the agreement, for

otherwise, it cannot be enforced


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9. Possibility of performance

Another essential feature of a valid contract is that it must be

capable of performance.

Section 56 lays down that An agreement to do an act impossible in

itself is void.

If the act is impossible in itself, physically or legally, the agreement

cannot be enforced at law.


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10. Not expressly declared void

The agreement might not have been expressly declared void by

any law in force in the country.

In such cases the agreements cannot be enforced


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TYPES OF CONTRACT

According to enforceability

According to their performance

On the basis of their formation


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According to enforceability

Valid contractAn agreement enforceable by law is a Valid contract

Void contractSec 2(j) defines this contract as a contract which ceases to beenforceable by law becomes void at the time when it ceases to

be enforceable by law.


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Illegal contract

A contract arising out of an illegal agreement is illegal ab

initio

Voidable contract

Sec2(i) of the contract act defines as "An agreement which is

enforceable by law at the option of one or more of the partiesthere to, but not at the option of the other or the others.


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According to their performance

Unilateral contract

A unilateral contract is one which only one party has to fulfill his

obligation at the time of formation of the contract the other party

having fulfilled his obligation at the time of contract

Bilateral contract

A contract in which the obligation on the part of both the parties

are outstanding at the time of the contract


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Executed contract

If both the parties of a contract have performed their

respective obligation , it is said to be Executed contract

Executory contract

A contract in which both the parties have not yet performed

their obligations either wholly or partially


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On the basis of their formation

Express contractIf the terms of the contract are expressly agreed upon at the

time of formation of the contract

Implied contract

An implied contract is one which is inferred from the act or

conduct of the parties

Quasi contract

In a quasi contact the rights and obligations arise not by an

agreement but by operations of law.


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References

Kapoor, N.D. (2003), Elements of Mercantile Law, Sultan

Chand and Sons, New Delhi.

http://www.indialawinfo.com/bareacts/soga.html

M.C. Kucchal ( 2002), Business Law, Vikas Publishing

House Pvt. Ltd, Delhi.

P.C. Tulsian (2002), Business Law, Tata Mc. Graw Hill

Pvt. Ltd, Delhi.

Avatar Singh , The principles of mercantile law , Eastern

Book Company


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Thank you

Documents

Present Law2003