Master of Business Administration - Semester 3
MB 0051: “Legal Aspects of Business
(Book ID: B1207)
ASSIGNMENT- Set 1
1. “All agreements are not contracts, but all contracts are agreements”. Comment.
A contract is an agreement, enforceable by law, made between at least two parties by whichrights are acquired by one and obligations are created on the part of another. If the party,which had agreed to do something, fails to do that, then the other party has a remedy.
Airlines sells a ticket on 1 January to
for the journey from Mumbai toBangalore on 10 January. The Airlines is under an obligation to take
from Mumbai toBangalore on 10 January. In case the Airlines fails to fulfil its promise,
has a remedy againstit.Thus,
has a right against the Airlines to be taken from Mumbai to Bangalore on 10 January.A corresponding duty is imposed on the Airlines. As there is a breach of promise by thepromisor (the Airlines), the other party to the contract (i.e.,
) has a legal remedy.
(e) defines an agreement as “every promise and every set of promises formingconsideration for each other”. In this context, the word ‘promise’ is defined by Sec.2
(b). In acontract there are at least two parties. One of them makes a proposal (or an offer) to theother, to do something, with a view to obtaining the assent of that other to such act. Whenthe person to whom the proposal is made signifies his assent thereto, the proposal is said tobe accepted. A proposal, when accepted becomes a promise (Sec.2 (b)).
Enforceability by law:
The agreement must be such which is enforceable by law so as tobecome a contract. Thus, there are certain agreements which do not become contracts asthis element of enforceability by law is absent.
Essentials of a contract
Sec.10 provides that all agreements are contracts, if they are made by free consent of parties, competent to contract, for a lawful consideration, and with a lawful object, and arenot expressly declared by law to be void. To constitute a contract, there must be anagreement between two or more than two parties. No one can enter into a contract withhimself. An agreement is composed of two elements
offer or proposal by one party andacceptance thereof by the other party.