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Business LawsBusiness LawsBusiness LawsBusiness Laws
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Contract Act, 1872
Definition of Contract by Pollack
³every agreement and promise enforceable at law is contract.´
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Contract Act, 1872
Definition of Contract by Salmond
³a contract is an agreement creating and defining
obligations between the parties´
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Contract Act, 1872
Definition of Contract by Sir William Anson
³a legally binding agreement between two or more persons
by which rights are acquired by one or more to acts orforbearance on the part of others.´
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Contract Act, 1872
Definition of Contract u/s 2(h)
³An agreement enforceable by law is a Contract.´
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Contract Act, 1872Contract = Agreement + Enforceability
Agreement = Offer + Acceptance
Enforceability = Legal obligations b/w parties
Agreement:
a. Plurality of persons
b. Consensus Ad idem.
Enforceability:
Social Agreements (No)
Legal Agreements (Yes)
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ESSENTIALS OF VALID
CONTRACT
F L2
I P C2
A N
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Ingredientsof a
Valid Contract
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Valid Contract - FLIPCANS
�Free Consent
�Legal Relationship
�L
egalO
bject�In writing if required by Law
�Possible to Perform
�Consideration
�Capacity of the parties
�Agreement�Not Expressly declaredVoid
�Subject Matter
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Formation of ContractFormation of ContractFormation of ContractFormation of Contract
By ConductBy Conduct
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By Conduct
Mean
Body LanguageSilently allow other Person to enter into
A contract
Here words &
Written form are not
Shared b/w parties
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Formation of ContractFormation of ContractFormation of ContractFormation of Contract
By WritingBy Writing
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Usefulness of Written Contract
Documentary
Proof
No party can
Easily deny
Easily preserve
For a longer period
Less disputes
As some disputes arises as one party forgets
Law considers Written evidence more powerful than Oral
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Contract
Purchases Service RentSales
Amount/ Goods both are immaterial.
Oral WrittenBy Conduct
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Size of Amount and Goods
Not important
Rupee OneMillions
SmallLarge
Amount Goods
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E
nforceabilityof theContract
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Contract
Enforceability
Valid Void-able Void
Fully
EnforceableBy law/ court
Aggrieved
Party mayMake
Contract as
Can not be
EnforceableBy Court
Or Law
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According to Enforceability1. Valid Contract
2. Voidable Contract
* Burden of Proof
3. Void Contact
*Impossibility of performance
**Subsequent Illegality
*** Rejection of a Voidable Contract
**** Impossibility of depending Event
4. Unenforceable Contract
5. Illegal Agreement
6. Void Agreement
Kind of Contracts
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Contract
Formation
ExpressedConstructive
Quasi
By Conduct
Implied Contract
Oral
Written
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Kind of Contracts
� According to Formation
1. Express Contract
2. Implied Contract
3.Quasi Contract
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Kind of Contracts� According to performance
1. Exectued Contract
2. Executory Contract
� According Parties
1. Unilateral Contract2. Bilateral Contract
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Contract
Performance
Executory Executed
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Executed Contract
Delivery
100% on
Spot
Payment
100% on
Spot
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Executory Contract
Unilateral
Case -1
Payment
100% now
Delivery
Part now
Remainingin future
Case-1
Delivery
100%
Now
Full Delivery
in Future
Payment
Part now
Remainingin future
Full Payment
in Future
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PARTICULARSAGREEMENTS CONTRACTS
EnforceabilityA void agreement is unenforceable
from the very beginning.
A void contract is
enforceable when it is
originally made. It becomes
un-enforceable later on.
EnforcedA void agreement can never be
enforced.
A void contract can be
enforced before its being un-
enforceable.
Restoration of
Benefit
In a void agreement the parties arenot entitled for restoration of
benefits which they have exchange
during the process of contract.
In a void contract the parties
are entitled for restoration of
benefits which they have
exchange during the
process of contract.
VOID
DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS
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PARTICULARS ILLEGAL AGREEMENTS VOID AGREEMENTS
ProhibitedAn illegal agreement is prohibited
by law.
A void agreement is not
prohibited by law.
Punishable An illegal agreement is punishableA void agreement is not
punishable
NatureAn illegal agreement is also void
agreement
A void agreement is not
illegal agreement
Collateral
Agreement
A collateral agreement to an illegal
agreement is not enforceable.
A collateral agreement to avoid agreement is
enforceable.
DISTINCTION B/W ILLEGAL AGREEMENT & VOID CONTRACTS
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PARTICULARS VOID AGREEMENTS VOIDABLE CONTRACTS
EnforceabilityA void agreement is un-
enforceable by law.
A voidable contract is a valid
contract and enforceable till
it is rejected.
DefectsA void agreement is void ab-initio
and its defects are incurable.
A voidable contract is not
void ab-initio and its defects
are curable.
Rights of Third
Party
In a void agreement even a thrid
party cannot acquire any right from
person claiming undr such a
contract.
In a voidable contract a third
party can acquire a right
from a person claiming
under such a contract.
Compensation
In a void agreement the person is
not entitled to compensation froloss arising due to non
performance of the agreement.
In a voidable contract a
person is entitled tocompensation for loss
arising due to non-
performance of the contract.
Collateral
Agrement
Collateral agreement to void
agreement is a void contract.
A collateral agreement to a
voidable contract is not a
void contract.
DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS
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