Nature of contract


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Nature of contract

  1. 1. Corporate & Business Law THE INDIAN CONTRACT ACT, 1872
  2. 2. WHAT IS LAW? <ul><li>Law consists of rules that regulate the conduct of individuals, businesses, and other organizations within society. </li></ul><ul><li>Law means any rule of conduct, standard or pattern , to which actions are required to conform. </li></ul>
  3. 3. OBJECT OF LAW <ul><li>Object of law is the creation and protection of legal rights to maintain order in the society. </li></ul><ul><li>Keeping the peace . </li></ul><ul><li>Shaping moral standards . </li></ul><ul><li>Promoting social justice </li></ul><ul><li>Maintaining the status quo </li></ul><ul><li>Facilitating orderly change </li></ul><ul><li>Maximizing individual freedom </li></ul>
  4. 4. IGNORTIA JURIS NOT EXCUSANT <ul><li>Ignorance of law is - NO EXCUSE </li></ul><ul><li>Every member of the society is expected that his actions conform to a set pattern or standard as reflected in legal rules. </li></ul><ul><li>For this purpose he is presumed to know the legal rules. He cannot take the plea that he did not know them. </li></ul>
  5. 5. Business Laws <ul><li>Business law is also termed as commercial Law and mercantile law. </li></ul><ul><li>Business law is generally used to denote that portion of law which deals with rights and obligations arising out of transactions between mercantile persons. </li></ul>
  6. 6. Cont….. <ul><li>The term appears to be a convenient way of grouping together the laws that should be regarded important for men in business. </li></ul><ul><li>It includes following laws: </li></ul><ul><ul><ul><li>Law of contracts </li></ul></ul></ul><ul><ul><ul><li>Sales of goods act </li></ul></ul></ul><ul><ul><ul><li>Partnership act </li></ul></ul></ul><ul><ul><ul><li>Company law </li></ul></ul></ul><ul><ul><ul><li>Negotiable instrument act </li></ul></ul></ul><ul><ul><ul><li>Insurance act </li></ul></ul></ul>
  8. 8. The Law of Contract <ul><li>It is that branch of law which determines the circumstances in which promises made by the parties to a contract shall be legally binding on them. </li></ul><ul><li>It defines: </li></ul><ul><li>Remedies available </li></ul><ul><li>Conditions under which remedies are available </li></ul>
  9. 9. Nature of the Law of Contract <ul><li>It does not lay down the duties and responsibilities which the law will enforce </li></ul><ul><li>BUT, </li></ul><ul><li>It consists a number of limiting principles, subject to which; the parties may create rights & duties for themselves which the law will upload. </li></ul>
  10. 10. <ul><li>Law of contract </li></ul><ul><li>creates </li></ul><ul><li>jus in personam, </li></ul><ul><li>jus in rem </li></ul>
  11. 11. DEFINITION OF CONTRACT <ul><li>Sec.2(h) “An agreement enforceable by law.” </li></ul><ul><li>Contract =Agreement + enforceability by law. </li></ul><ul><li>Agreement must create a legal obligation or duty. </li></ul>
  12. 12. AGREEMENT <ul><li>Sec. 2(e), “Every promise and every set of promises, forming consideration for each other” </li></ul><ul><li>An agreement takes place when an offer is made by one person is accepted by the other. </li></ul><ul><li>All agreements are not contracts but all contracts are agreements. (Balfour v/s Balfour) </li></ul><ul><li>Agreement = Offer + Acceptance </li></ul>
  13. 13. Agreement is a wide term <ul><li>All agreements are not contracts </li></ul><ul><li>BUT </li></ul><ul><li>All contracts are agreements </li></ul><ul><li>(Social v/s Legal) </li></ul><ul><li>Consensus ad idem </li></ul><ul><li>Obligation </li></ul>
  14. 14. ESSENTIAL ELEMENTS OF VALID CONTRACT <ul><li>Offer and acceptance – Two parties, offer & acceptance </li></ul><ul><li>Intention to create legal relationship – </li></ul><ul><li>(Balfour vs. Balfour- domestic, social agreements ) </li></ul><ul><li>Lawful consideration- cash,kind,act of abstinence </li></ul><ul><li>Capacity of parties – Competency </li></ul><ul><li>Free consent – without pressure (physical or mental) </li></ul>
  15. 15. <ul><li>Lawful object – The object of contract </li></ul><ul><li>is unlawful, if : </li></ul><ul><li>Immoral </li></ul><ul><li>Illegal </li></ul><ul><li>Opposed to public policy </li></ul><ul><li>Agreement not expressly declared void – agreements must not be declared voidby law in force in the country </li></ul><ul><li>Certainty and possibility of performance </li></ul><ul><li>Legal formalities – In writing, properly stamped </li></ul>
  16. 16. <ul><li>Valid Contracts </li></ul><ul><li>Voidable Contracts </li></ul><ul><li>Void Agreement </li></ul><ul><li>Void Contracts </li></ul><ul><li>Unenforceable Contracts </li></ul><ul><li>Illegal contract </li></ul><ul><li>Express Contracts </li></ul><ul><li>Implied Contracts </li></ul><ul><li>Quasi contracts </li></ul><ul><li>Executed Contracts </li></ul><ul><li>Executory Contracts </li></ul><ul><li>Bilateral Contracts </li></ul><ul><li>Unilateral Contracts </li></ul>Classification of Contracts Validity or Enforceability Performance Formation
  17. 17. CLASSIFICATION OF CONTRACTS… <ul><li>According to validity </li></ul><ul><li>Valid contract – Agreement satisfying all the essentials. </li></ul><ul><li>Voidable contract – Consent of one party is not free. ( Aggrieved party, avoid in reasonable time). & Void at option of that party only </li></ul><ul><li>Void contract – A valid contract when it was made but subsequently it becomes void. </li></ul>
  18. 18. <ul><li>Illegal contract – An agreement which is forbidden by law or against the policy of law is known as unlawful or illegal agreement. </li></ul><ul><li>( smuggling, murder ) </li></ul><ul><li>Void agreements - Void ab - initio …. From the very beginning ( lack of one of the essentials) </li></ul><ul><li>Unenforceable contract – one which cannot be enforced in a Court of law due to some technical defects </li></ul>
  19. 19. According to formation <ul><li>Express contract – orally or in writing </li></ul><ul><li>Implied contract – by conduct or acts </li></ul><ul><li>Quasi contract – no intention of the parties to create legal relationship. It is created by law. </li></ul>
  20. 20. According to time of performance: <ul><li>Executed contract – Both the parties have performed. </li></ul><ul><li>Executory contract – Both the parties are yet to perform. It can be partly as well. </li></ul>