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Nature of contract

law

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Nature of contract

  1. 1. NATURE OF CONTRACT Presented by – Akhilesh ojha
  2. 2. LAW OF CONTRACT • Definition of Contract -: a contract is an agreement made between two or more parties which the law will enforce. Sec.2 (h) • The law of contract 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. • The law of contract also introduces definiteness in business transaction. • According to Sir William anson the law of contract is in tended to ensure that what a man has been led to expect shall come to pass, and that what has been promised to him shall be performed.
  3. 3. AGREEMENT AND ITS ENFORCEABILITY • If we analyse the definition of contract we find that a contract essentially consists of two elements . 1-: Agreement 2-: Its enforceability by law. • Agreement = offer + acceptance. • All agreements are not contracts but all contracts are agreement. • It may be social, religious or legal -: • A social agreement like an agreement ,to go to a picnic or a movie is not enforceable in a court of law. • Similarly, religious agreement is also not enforceable because the parties entering into such agreement do not intend to go to a court in case the agreement is not fulfilled.
  4. 4. • In a business agreement or commercial agreement intention to create a legal obligation is always presumed. • For ex-: A agrees to sell his Fiat car to B for Rs. 20000.It is an agreement which is enforceable at law. If A does not sell the car, B can file a suit to recover the car or damages. Similarly, if B does not purchase the car, A can file a suit against B to compel him to purchase the car or pay damages.
  5. 5. • LAW OF CONTRACT IS NOT THE WHOLE LAW OF OBLIGATION -: • The law of contract is essentially the law of obligation because an agreement creating legal obligation is a contract. • However ,the law of contract is not the whole law of obligation because obligation do not necessarily arise out of an agreement. • It may arise out of number of sources, for ex-: torts or civil wrongs ,quasi con tracts, implied contracts, judicial decisions, trust, husband and wife relationship etc.
  6. 6. • LAW OF CONTRACT CREATES JUS IN PERSONAM AS DISTINGUISHED FROM JUS IN REM - : • Jus in rem means a right against or in respect of a thing. • Jus in personam means a right against or in respect of a specific person. • For ex- a owes a certain sum of money to B. B has a right to recover this amount from A. The right can be exercised only by B and by none else against A. The right of B is jus in personam.
  7. 7. ESSENTIALS OF VALID CONTRACT • OFFER AND ACCEPTANNCE -: An agreement involves two parties one making the offer and the other accepting it. Offer must be definite and it should be accepted unconditionally. • INTENTION TO CREATE LEGAL RELATIONSHIP -: An agreement should entered in to with an intention to create a legal relationship or obligation. For ex- A invites his friend B to see a movie together. If B does not reach the picture hall, A can not go to a court of law to recover his loss i.e, cost of ticket. • LAWFUL CONSIDERATION -: An agreement must be supported by consideration. It means something in return which is enforceable at law. In simple words consideration is the price for promise. A promise without consideration is not enforceable at law.
  8. 8. • FREE CONSENT -: For a valid agreement, parties must give their consent freely. Consent means that two person have agreed upon the same thing in the same sense. For ex-: A has two cars a maruti and a Fiat .He agrees to sell one of his car to B .If A is thinking to sell Fiat car and B is thinking to buy a maruti car, then A and B do not agree on the same thing in same sense. • LAWFUL OBJECT -: An agreement must be made for a lawful purpose. The object of an agreement should not be – • Fraudulent • Unlawful • Immoral • Opposite to public policy.
  9. 9. CLASSIFICATION OF CONTRACT • ON THE BASIS OF CREATION OR FORMATION -: 1-: EXPRESS CONTRACT-: An express contract may be created orally ,i.e by words spoken or written . When one party makes the offer by words spoken or written and the other party accept the same accordingly there is an express contract created. 2-: IMPLIED CONTRACT-: An implied contract is created by the conduct or acts of the parties and not by words spoken or written. 3-: QUASI CONTRACT-: Indian contract act has named such contract as certain relationship resembling those created by contracts. Such contracts are not created expressly or impliedly by the parties but are created by law on the equitable principles that a person should not allow to become rich at the expense of the other. For ex-: A,a trader leaves certain goods by mistakes at B’s house. B must either return the goods or pay the price.
  10. 10. • ON THE BASIS OF VALIDITY -: 1-: VALID CONTRACT -: An agreement enforceable at a court of law is called a valid contract. 2-: VOID AGREEMENT –: An agreement which can not be enforced at a court of law is void agreement. Sec 2 (g) 3-:VOID CONTRACT -: Originally an agreement may have been enforceable when it was made. But subsequently due to impossibility or illegality, it may become void.

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