1.contract intro & concepts copy

CONTRACT DEFINATION
Governed by the Indian Contract Act (1872)
DEFINITION OF A CONTRACT:
 a) Every promise or every set of promises forming
consideration for each other is an agreement
b) An agreement that is enforceable by lawis a
contract. That which is not enforceable by law is said to
be 'Void'.

LEGAL REQUIREMENTS
(a) Parties: agreement implies existence of two or more competent
parties, i.e., not disqualified either by infancy or insanity or by other
specia1 qualification by personal law. They must be of sound mind
at least when the contract is made.
 Consideration: (a) Consideration is a promise or a set of
promises.
(b) Promises must have mutual offer and acceptance.
© Total absence of consideration will render it un-enforceable.
The following contracts are the exceptions to this rule:
Contract in writing, registered between near relations and of
natural love and affection (S25 of the Contract Act) e.g., A, for
natural love and affection, promises to give his son, B Rs. 1,000/-. A
puts his promise to B into writing and registers it.
To compensate a person for something voluntarily done for the
promisor or which the promisor was bound to do (S25 of the
Contract Act) e.g., 1. A finds B's purse and gives it to him. B

LEGAL REQUIREMENTS
 Consideration must not be unlawful (Sec 23 of the Contract Act):
(i) Forbidden by law e.g., A agrees to pay a sum of Rs. 50/- to B if B
rides the bicycle during night without light on his bicycle in a
place where such an act is forbidden by law.
(ii)Defeating provisions of any law,
(iii)Fraudulent e.g., A, B and C enter into an agreement for the
division among them of gains acquired or to be acquired by them
by fraud.
(iv)Injurious to a person or property of another e.g., A agrees to pay
a sum of Rs. 1,000/- to B, if B destroys the garden maintained by
A.
(v)Immoral or opposed to public policy, e.g. A who is B's mukhtar,
promises to exercise his influence as such with B in favour of C
and C promises to pay Rs. 1,000/- to A. The agreement is void
because it is immoral.

OTHER REQUIREMENTS
 The contract must not be:
 In restraint of the marriage of any person other than a minor as it is void (S26 of the
Contract Act);
 In restraint of trade (Sec 27 of the Contract Act) e.g. A, a tailor was employed_ in the
terms that during his employment and six months after its termination, A will not work
as a tailor within one Km of B's shop. Here the restriction during employment is
enforceable but not after the termination of the employment._
 In restraint of legal proceedings (Sec 28 of the Contract Act) e.g., If an agreement
contains that neither party shall have any right to have recourse to a court of law in
case of any disputes such a provision is void even though both the parties have agreed.
 Of uncertain meaning (Sec 29 of the Contract Act) e.g., A agrees to sell to B "a hundred
tons of oil". There is nothing whatever to show what kind of oil was intended. The
agreement is void for uncertainty.
 By way of wager (Sec 30 of the Contract Act) e.g., A agreed to sell his horse to B for Rs.
30000/- if the horse trots "at a speed of 18 kmph but for one rupee if it failed to do so.
The horse failed to do so. B claimed the horse from A for one rupee. The transaction is
really a bet and hence void as a wager.
 For an impossible act (Sec-35. 36 and 56 of the Contract Act) e.g., A agrees to _pay Rs.
1,000/- if B will marry A's daughter C. C was dead at the time of agreement. The
agreement was void.
 Involving a mistake of both parties on to the essential matters i.e., matters of fact (sec 20
of the Contract Act)

At inception:
(a) Fraud (See 14, 17 and 19)
(b) Coercion (See 14, 15 and 19)
(c) Misrepresentation (Sec 14, 18 and 19)
(d) Undue influences (Sec 14, 16 and 19)
By subsequent default:
(a) Where the offer is not accepted (Sec 38)
(b) When one party prevents performance of
reciprocal promise (Sec 53)
( c) When a party fails to perform at the time fixed if
time is of the essence of the contract (Sec 53)
voidable contract

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