Contracts vs Agreements - Law of Contract - Lecture Slides, Slides of Contract Law

Download Contracts vs Agreements - Law of Contract - Lecture Slides and more Slides Contract Law in PDF only on Docsity! Law of Contract Law of Contract 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 In simple words, the purpose of law of contract is to ensure the parties who enter in to contract understand the terms of the contract Docsity.com Definition of Contract ‘a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law’ Oxford Dictionary Docsity.com Consensus ad idem Meeting of the minds - when the two parties to a contract, both have the same understanding of the terms of the agreement. There would not be a meeting of the minds if Bill Buyer said, "I'll buy all your stock," and he meant shares in a corporation, and Sam Seller said, "I'll sell all my stock to you," and meant his cattle. Docsity.com Obligation o An agreement, to become a contract, must give rise to a legal obligation or duty. o An obligation is a legal tie which imposes upon a specific person or persons the necessity of doing or abstaining from doing a specific act or acts. Docsity.com Essentials of a Valid Contract o Offer and Acceptance o Intention to create legal relationship o Lawful consideration o Capacity of parties-Competency o Free and genuine consent o Lawful object o Agreement not declared void o Certainty and possibility of performance o Legal formalities Docsity.com Offer and Acceptance At least two parties to an agreement one party making the offer and the other accepting it Terms of the offer must be definite Acceptance must be absolute and unconditional Acceptance must be as prescribed Docsity.com Intention to create legal relationship When two parties enter into an agreement, their intention must be to create legal relationship between them, otherwise there is no contract between them Docsity.com Free and genuine consent There must be free and genuine consent of the parties to the agreement. There is absence of free consent if the agreement is induced by coercion, undue influence, fraud, misrepresentation Docsity.com Lawful object The object of the agreement must be lawful In other words, it means that the object must not be; o illegal o immoral o opposed to public policy Docsity.com ESSENTIALS OF A VALID CONTRACT: 7. Agreement not declared void: The agreement must not have been expressly declared void by law in force in the country. A void agreement is one which is not enforceable by law. Docsity.com Classification of Contracts Contracts may be classified according to, 1.Validity 2.Formation, and 3.Performance VALIDITY FORMATION PERFORMANCE 1.Voidable Contract [2(i)] 1.Express Contract [9] 1.Executed Contract 2.Void Agreement [2(g)] 2.Implied Contract [9] 2.Executory Contract 3.Void Contract [2(j)] 3.Quasi Contract 3.Unilateral Contract 4.Illegal Agreement 4.Bilateral Contract 5.Unenforceable Contract Docsity.com 1.Classification according to „Validity‟  i] Voidable contract: An agreement which is enforceable by law at the option of one party but not at the option of the other or others is a voidable contract [Sec.2(i)]. The party whose consent is not free may either rescind (avoid or repudiate) the contract, if he so desires, or elect to be bound by it. A voidable contract continues to be valid till it is avoided by the party entitled to do so. Docsity.com Classification of Contract………  Example of Voidable Contract: A promises to sell his car to B for Rs 2000. His consent is obtained by use of force.The contract is voidable at the option of A .  He may avoid the contract or elect to be bound by it. Docsity.com Cont‟d…..  iv] Illegal Agreement: An illegal agreement is one which transgresses the public policy or which is criminal in nature or which is immoral.  E g.,An agreement to import prohibited goods. All illegal agreements are void but all void agreements are not necessarily illegal. Docsity.com Cont‟d…  ………….Illegal Agreement:  An illegal agreement is not only void as between the parties but has this further effect that even the collateral transactions to it become tainted with illegality. A collateral transaction is one which is subsidiary, incidental or auxiliary to the principal or original contract. Docsity.com Cont‟d……..  v] Unenforceable Contract:  An unenforceable Contract is one which cannot be enforced in a Court of law because of some technical defect such as absence of writing or where the remedy has been barred by lapse of time. The contract may be carried out by the parties concerned; but in the event of breach or repudiation of such a contract, the aggrieved party will not be entitled to the legal remedies. Docsity.com Contracts ………classified. (iii)QUASI CONTRACT: Strictly speaking Quasi Contract is not a contract at all. A contract is intentionally entered in to by the parties. A quasi contract, on the other hand is created by law. It rests on the ground of equity that, “ a person shall not be allowed to enrich himself unjustly at the expense of another ”. Docsity.com III. Classification according to „Performance‟  (i) Executed Contract (ii) Executory Contract -Unilateral or One-sided Contract -Bilateral Contract Docsity.com ….. Classification according to „Performance‟ (I) EXECUTED CONTRACT: „Executed‟ means that which is done. An executed contract is one in which both the parties have performed their respective obligations. (ii) EXECUTORY CONTRACT: „Executory‟ means that which remains to be carried in to effect. A contract may be partly executed and partly executory.  ONE-SIDED OR UNILATERAL CONTRACT Performance of only one party is outstanding.  BILATERAL CONTRACT. Performance of both the parties remains outstanding. Docsity.com CASE 2.  (a) A engages B for a certain work and promises to pay such remuneration as shall be fixed by C. B does the work.  (b) A and B promise to marry each other.  (c) A takes a seat in public vehicle.  (d) A invites B for a card party Docsity.com VERDICT OF CASE 2.  (a) There is a contract between A and B and A is bound to pay the remuneration as shall be fixed by C. If C does not fix , or refuses to fix the remuneration, A is bound to pay a reasonable remuneration.  (b) There is a contract between A and B  (c) There is a contract between A and B  (D) There is no contract Docsity.com CASE 3. A forced B to enter in to a contract at the point of pistol. What remedy is available to B. If he (B) does not want to be bound by the contract ..?? Docsity.com VERDICT OF CASE 4.  Yes, L is bound to pay M a reasonable remuneration. Docsity.com CASE 5.  C orally offered to pay A, an auto mechanic, Rs 50 for testing a used car which C was about to purchase from D.  A agreed and tested the car. C paid A Rs 50 in cash for his services. Is the agreement between „C‟ and „A‟, (a) express or implied,…..??? (b) executed or executory, …??? (c) Valid,void, voidable or unenforceable…??? Docsity.com VERDICT OF CASE 5. The agreement is,  (a) express,  (b)executed, and  (c) valid. Docsity.com CASE 7.  D lived as a paying boarder with a family. He agreed with the members of the family to share prize money of a newspaper competition.  The entry sent by D won a prize 750 sterling pounds. He refused to share the amount won.  Can the members of the family recover their share …….??? Docsity.com VERDICT OF CASE 7. Yes, „as there was mutuality in the agreement between the parties‟ and the parties had intended to be bound. Docsity.com OFFER & ACCEPTANCE An offer is a proposal by one party to another to enter in to a legally binding agreement with him. Docsity.com How an offer is made E.g., An offer may be made by express words, spoken or written. This is known as Express offer. When A says to B, “will you purchase my house at Meerut for Rs.5,00,000” ? Docsity.com ……How an offer is made An offer may be inferred from the conduct of the parties or the circumstances. This is known as Implied Offer. E.g., When a transport company runs a bus on a particular route, there is an implied offer by the transport company to carry passengers for a certain fare. Docsity.com „Specific‟ and „General‟ Offer….. When an offer is made to a particular person, it is called specific offer. E.g. A offers to sell car to B [only] for Rs.1,00,000. When an offer is made to the world at large, it is called general offer. E.g., Mrs Carlill v. Carbolic Smoke Ball Co.[1893]. Docsity.com LEGAL RULES AS TO OFFER  1.Offer must be such in law is capable of being accepted and giving rise to legal relationship  2..Terms of offer must be definite, unambiguous and certain not loose and vague. Docsity.com ……LEGAL RULES AS TO OFFER  3.An offer must be distinguished from; (i) A declaration of intention and an announcement. (ii) An invitation to make an offer or to do business. Newspaper advertisements are not offers. A recognized exception to this is a general offer of reward to the public. Docsity.com ……LEGAL RULES AS TO OFFER  4.Offer must be communicated..  In Lalman Shukla vs. Gauri Dutt, A sent his servant A in search of missing nephew. Subsequently A issued hand bills offering a reward of Rs.501 to any one who might trace the boy. B brought the boy back. After some time, B was dismissed. He filed a suit claiming the reward. Held, there can be no acceptance without knowledge of the offer. Hence B was not entitled to the reward. [1913]  5.Offer must be made with a view to obtaining the assent. Docsity.com