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LawofContract
Introduction:Thelawofcontractisthechildof
commerce.Itisnotonlythemerchantortraderbutevery personwholivesintheorganisedsociety,consciouslyor unconsciouslyentersintocontractsfrom sunriseto sunset.Whenapersonbuysacomputerorhiresataxi,or takesacreditcardfrom abankorgivesloantoanother,or hedoesbookingforDJformarriageparty,heentersinto andperformscontractsthoughhemaybeunawareofthis fact. Theessentialpartofthecontractisthatpromisesare protectedandenforced.Generally,legallyenforceable promisesarecontracts. Thelawofcontractismainlyconcernedwiththree questions: ( 1 )Isthereanagreement? ( 2 )Canthepartiestosuchagreementenforceitinacourt oflaw? ( 3 )Howtheycanenforceit? Thelawofcontractdoesnotlaydownrightsandduties whichthelawenforce,itconsistsratherofanumberof
limitingprinciples,subjecttowhichthelawwilluphold.A personisonlyentitledtoenforcehiscontractualrightina reasonablewayandthecourtwillnotsupportanattempt toenforcethem inanunreasonableway. FORMATIONOFCONTRACT: Whenonepersonmakesanofferandtheotheraccepts thesame,therearisesanagreementwhenthisagreement isenforceablebylawitbecomesacontract. Theessenceofacontractismeetingofthewillsofthe parties.Theremustbeconsensusadidem.Thecontracting partiesmustagreetothesamethinginthesame sense.Theremustbemeetingofthemindofthe parties.Themeetingofmindsshouldbe objective,i.e.manifestationofmutualassent.Thereis mutualandfinalassentforanagreementtobebinding betweentheparties ContractDefined: Ansondefinescontractasanagreementenforceableat lawmadebetweentwoormorepersons,bywhichrights areacquiredbyoneormoretoactsorforbearanceson thepartofotherorothers. Salmondsdefinitionof'contract'states- 'Acontractisanagreementcreatinganddefining
proposalismadesignifieshisassentthereto,the proposalissaidtobeaccepted.Aproposalwhen acceptedbecomesapromise".Anagreementinvolves proposalorofferbyonepartyandacceptanceofthesame bytheotherparty.Itrequiresexistenceoftwoormore personsthatispluralityofpersons. Areadingofclause(a),(b),(c),(e),and(h)ofsection 2 of theactshowsthatacontractisanagreementisa promise,apromiseisformedbyanacceptanceofa proposalandtheremustbeapromisorwhomakesthe proposalandapromiseewhoacceptsit.The'proposal' appearstobesynonymoustotheword'offerasused inEnglishlawlnEnglishlaw,onewhomakestheproposal isgenerallycalledthe'offeror'andthepersontowhom the proposalismadeiscalledthe'offeree'. Thusanagreementistheoutcomeoftwoconsenting mindsthatisconsensusadidem; Thus,Agreement=offer(orproposal)+acceptanceof offer AgreementsEnforceablebyLaw: WhatagreementsareenforceablebyLaw?Section 10 of thelndianContractAct, 1872 laysdowntheconditionsfor theenforceablility.Itprovidesthatallagreementsare
contractsiftheyaremadebythefreeconsentofthe parties,competenttocontractforalawfulconsideration andwithalawfulobject,andarenotherebyexpressly declaredtobevoid.Ifweanalysethisprovision,wefind thatthefollowingaretheessentialconditions,whichmust besatisfiedforanagreementtobecomeacontract: (a)Thepartiesmustbecompetenttocontract; (b)Theremustbefreeconsentoftheparties; (c)Itmustbeforalawfulconsiderationandlawful object;and (d)theagreementmustnotbeexpesslydeclaredtobe void. Thetwopartiesenterintoobligationstoeachother,i.e.,one partyundertakestodoortoabstainfrom doingsome definiteactoractsinreturnforsomespecificconductor actonthepartoftheotherparty.Theobligationmustbe suchasisenforceablebylaw.Inotherwords,itshouldnot bemerelyamoral,socialorreligiousobligation. Theseobligationsdonotform agreementsbecausethey donotcreateanylegalduties.Itmeansthattheparties mustintendthatifoneofthem failstoperform his promise,onewouldbeanswerableinlawforthatfailure. Obligation:
makeavalidcontract. 1 )OfferandAcceptance:Inthefirstinstance,theparties oughttohavetheintentiontocreatealegalobligation betweenthem throughtheform ofofferandacceptance. Theyshouldhaveintentiontoimposedutyonthe promisortofulfillthepromiseandbestowarightonthe promiseetoclaim itsfulfillment.Itmustnotbemerelya moralonebutitmustbelegal. 2 )LawfulConsideration:Thesecondaspecttolookforis thepresenceof"lawfulconsideration"whichisan essentialelementofavalidcontract.Considerationisa technicalwordmeaningtherebyquidproquo,thatis, somethinginreturn.Itmustresultinbenefittooneparty anddetrimenttotheotherpartyoradetrimenttoboth. Example:AagreestosellhisbookstoBforRs 100 ,B's promisetopayRs 100 istheconsiderationforA'spromise tosellhisbooksandA'spromisetosellthebooksisthe considerationforB'spromisetopayRs 100. Ifthetwoessentialelementsarethere,wecansaythat thereisacontract,whichprima-faciewillholdgood,orat leastwecansaythatthereisanexistenceofcontract, althoughsomemorenecessaryelementsofvaliditymay bewanting.
3 )CapacitytoContract:Thepartiestoacontractmust havecapacity(legalability)tomakeavalidcontract.In everycaseofcontract,theremustbeassentoftheparties. Theassentpresupposesafree,fair,andseriousexercise ofthereasoningfaculty.If,therefore,eitheroftheparties toanagreementisdeprivedoftheuseofhis understandingorifheweredeemedbylawnottohave attainedit,therecanbenosuchagreement,whichshall bindhim.Section 11 oftheIndianContractActspecifies thateverypersoniscompetenttocontractprovided. a)isoftheageofmajorityaccordingtothelawtowhich heissubject; b)whoisofsoundmind;and c)isnotdisqualifiedfrom contractingbyanylawtowhich heissubject. Inotherwords(I)aminor,(ii)apersonofunsoundmind(a personofunsoundmindcanenterintoacontractduring hislucidintervals)and(iii)apersondisqualifiedfrom contractingbyanylawtowhichheissubject,forexample, analienenemy,foreignsovereignsandaccredited representativesofaforeignstate,insolventsandconvicts arenotcompetenttocontract. 4 )FreeConsent:Theconsentofthepartiesmustbe
performance.Section 56 laysdownthat"Anagreementto doanactimpossibleinitselfisvoid."Iftheactis impossibleinitself,physicallyorlegally,theagreement cannotbeenforcedatlaw. Example:AagreeswithBtodiscovertreasureby magic.Theagreementisnotenforceable. 7 ).Certainty:Section 29 ofthecontractactprovidesthat" Agreements,themeaningofwhichisnotorcapableof beingmadecertain,arevoid."Inordertogiverisetoavalid contractthetermsoftheagreementmustnotbevagueor uncertain.Itmustbepossibletoascertainthemeaningof theagreement,forotherwise,itcannotbeenforced. Example:A,agreestosellB"ahundredtonsofoil"There isnothingwhatevertoshowwhatkindofoilwas intended.Theagreementisvoidforuncertainty. 8 ).Writingandregistration:AccordingtotheIndian ContractAct,acontractmaybeoralorinwriting.But 8 n certainspecialcasesitlaysdownthattheagreement,to bevalid,mustbeinwritingor/andregistered. 9 ).Notexpresslydeclaredvoid:Theagreementmustnot havebeenexpresslydeclaredtobevoidundertheAct. References: 1 .BusinessLaw,M.C.Kuchhal,VikasPublishingHouse
Ltd,Noida( 2014 ). 2 .Businesslaws,R.K.Bangia,AllahabadLawAgency,( 2007 ). 3 .ContractandSpecificReliefAct,Dr.AvtarSingh,Eastern LawCompanyNoida. 4 .BusinessRegulatoryFramework,B.N.Agarwal,Navyug SahityaSadan,Lohamandi,Agra.
