BCOC 133 BUSINESS LAW BLOCK-UNIT -1 ESSENTIAL OF CONTRACT (IMPORTANT NOTES)

 

BCOC 133 . BUSINESS LAW BLOCK-1 GENERAL LAW OF CONTRACT UNIT -1 ESSENTIAL OF CONTRACT (IMPORTANT NOTES)

*What is a contract *:-
A contract is legally binding agreement between two or more parties that creates an obligation to do or retrain from doing a particular thing. It involves mutual exchange of promises, where each party agrees to provide something of value, such as goods, services , money or performance, in exchange something value from the other party. For contract to be valid it typically require certain essential elements, includes

1. Offer and acceptance:-there must be clear offer by one party and corresponding acceptance by the other party

2. Legal capacity:-each party must have the legal capacity to enter in to a contract, meaning they are mentally competent and of legal age

3. Lawful object:-the purpose of the contract must be legal and not against the public policy

4. Consideration:-there must mutual exchange of something of value(consideration)

   between the parties

5. Certainty and possibility of performance:-term of the contact must be clear ,and

   performance must be possible.

Contract can be writing or oral.

Difference between an Agreement and Contract Agreement Contact

Every agreements may not be a contract All contacts are agreements. Classification of contract

1.Based on formation:-

• Express contract:- the terms and conditions are explicitly stated, either verbally or

  writing.

• Implied contract:- the agreements id inferred from the parties’ conduct or the

  circumstances. 2.Based on execution :-

• Executed contract:-all parties full filled their obligation

• Executory contract:- not all parties have full filled their obligations. 3.Based on enforceability :-

• Valid contract:- a contract that is legally valid

• Void contract:- lack of legal validity from the beginning and is not enforceable

• Voidable contract:- one party has the option to void the contract due to certain legal

An agreement is a broader term that refers to mutual understanding or arrangement between two or more parties.it can be either verbal or written	A contact is a specific type of agreement that is legally binding and enforceable by law. It involves a promise or set of promises between parties.
An agreement may or may not be legally binding. Some agreements are not intended to create legal obligations .	A contract necessarily creates legal obligation

defects.

1. Illegal or unlawful contract :-the agreement which can termed as illegal or unlawful.

Distinction between void agreement and voidable contract
Base Void agreement Voidable contract

Definition	A void agreement is one that is essentially without any legal effect from the beginning	A voidable contract is one that initially valid but has a defect that allows one party to void or cancel the contract at their option
Enforceability	It lacks legal enforceability and the court will not recognise or up holds it terms	It is enforceable until the party with the power to void decides to exercise that power
Legal consequences	Parties to void agreement cannot sue each other to enforce the terms of the agreement because , from a legal stand point, the agreement never existed	The party with the power to void can choose to either affirm the contract or void it. If they choose to void the contact become void from the beginning
Examples	Agreements with object such as an agreement to commit a crime or agreements against public policy are considered as void	Contract entered in to under duress, undue influence ,fraud or by a party lacking the capacity to contract (eg: a minor) are examples of voidable contract.

Difference between void agreement and illegal agreement Illegal agreement

Void agreement
It is essential without any legal effect from the beginning
All void agreements are not illegal
Court will not recognise or enforce the terms a void agreement

It involves a contract that is expressly prohibited by law
All illegal agreement are void
Court will not enforce the terms of an illegal agreement

Essentials of valid contract)

1. 1)  Offer :- there must be clear and definite proposal made by one party( the

   offeror)the other party( the offeree) expressing willing to enter a contract

2. 2)  Acceptance :-the offeree must unconditionally agree to the terms of the offer

3. 3)  Intention to create a legal relations:- both parties must have genuine intention to

   create legal obligations.

4. 4)  Legal capacity :-both parties have the legal capacity to enter in to a contract. It

   means they are sound mind, not under the influence of substances, and not

   minors

5. 5)  Free consent:- the consent of both parties must be freely given without any

   undue influence, coercion , misrepresentation ,fraud or mistake

6. 6)  Lawful object:- the purpose of the contract must be legal

7. 7)  Not expressly declared void:-the contract must not be expressly declared void by

law

8)Certainty and possibility of performance :-the term of the contract must be clear and certain, and performance must be possible.

9)Legal formalities:-some contracts require certain formalities for validity such as being writing

Some useful words from chapter:-

1. 1)  Enforceable :-contract or legal agreements is valid and can be upheld and implemented

   through legal means.

2. 2)  Void:- it refers something that is without legal effects or validity

3. 3)  Voidable:- it means that a contract or agreement is initially valid and enforceable but it

   contains a legal defect that allows one party the option to void or cancel it under certain specific condition.

4.