Corporate & Business Law THE INDIAN CONTRACT ACT, 1872

WHAT IS LAW? Law consists of rules that regulate the conduct of individuals, businesses, and other organizations within society. Law means any rule of conduct, standard or pattern, to which actions are required to conform.

OBJECT OF LAW


     

Object of law is the creation and protection of legal rights to maintain order in the society. Keeping the peace. Shaping moral standards. Promoting social justice Maintaining the status quo Facilitating orderly change Maximizing individual freedom

IGNORTIA JURIS NOT EXCUSANT



Ignorance of law is - NO EXCUSE Every member of the society is expected that his actions conform to a set pattern or standard as reflected in legal rules. For this purpose he is presumed to know the legal rules. He cannot take the plea that he did not know them.

Business Laws
Business law is also termed as commercial Law and mercantile law. Business law is generally used to denote that portion of law which deals with rights and obligations arising out of transactions between mercantile persons.

Cont..


The term appears to be a convenient way of grouping together the laws that should be regarded important for men in business. It includes following laws:  Law of contracts  Sales of goods act  Partnership act  Company law  Negotiable instrument act  Insurance act
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Object of Law


 

To look ahead with some sort of security in future To establish social-economic justice To remove existing imbalance in socioeconomic structure

THE INDIAN CONTRACT ACT, 1872

The Law of Contract

It 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. It defines: Remedies available Conditions under which remedies are available

 

Nature of the Law of Contract

It does not lay down the duties and responsibilities which the law will enforce BUT, It consists a number of limiting principles, subject to which; the parties may create rights & duties for themselves which the law will upload.

Law of contract creates jus in personam, jus in rem

DEFINITION OF CONTRACT
 

Sec.2(h) An agreement enforceable by law. A legal binding agreement defining and creating obligations between the parties Contract =Agreement + enforceability by law. Agreement must create a legal obligation or duty.

AGREEMENT

Sec. 2(e), Every promise and every set of promises, forming consideration for each other An agreement takes place when an offer is made by one person is accepted by the other. Agreement = Offer + Acceptance
Agreement

Enforceable at Law Contracts

Unenforceable at Law Not Contracts

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Agreement is a wide term

All agreements are not contracts BUT All contracts are agreements (Social v/s Legal) Consensus ad idem- same sense same time Obligation

ESSENTIAL ELEMENTS OF VALID CONTRACT



Offer and acceptance Two parties, offer & acceptance Intention to create legal relationship (Balfour vs. Balfour- domestic, social agreements not commercial/business- Rose v Frank Co) Lawful consideration- cash,kind,act of abstinence Capacity of parties Competency Free consent without pressure (physical or mental)

Lawful object The object of contract is unlawful, if :  Immoral  Illegal  Opposed to public policy
 

Agreement not expressly declared void agreements must not be declared void by law in force in the country Certainty and possibility of performance Legal formalities In writing or oral, properly stamped

Classification of Contracts

Validity or Enforceability
Valid Contracts Voidable Contracts Void Agreement Void Contracts Unenforceable Contracts Illegal contract

Formation

Performance

Express Contracts Implied Contracts Quasi contracts

Executed Contracts Executory Contracts Bilateral Contracts Unilateral Contracts

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CLASSIFICATION OF CONTRACTS
According to validity  Valid contract Agreement satisfying all the essentials.


Voidable contract Consent of one party is not free. ( Aggrieved party, avoid in reasonable time). & Void at option of that party only-> prevented or within Void contract A valid and binding contract when it was made but subsequently it becomes void. Eg war, floods, natural calamity

Illegal agreemennt An agreement which is forbidden by law or against the policy of law is known as unlawful or illegal agreement. ( smuggling, murder ) Void agreements - Void ab - initio . From the very beginning ( lack of one of the essentials) Unenforceable contract one which cannot be enforced in a Court of law due to some technical defects such as writing or lapse of time or remedy.

According to formation


Express contract orally or in writing Implied contract by conduct or acts Quasi contract no intention of the parties to create legal relationship. It is created by law. E-commerce contract- through internet

According to time of performance:



  

Executed contract Both the parties have performed. Executory contract Both the parties are yet to perform. It can be partly as well. Party executed and executory Unilateral contract- only one party has to fulfill at time
of formation but other has already performed before

Bilateral- obligations on both parties are outstanding at time of formation

Classification as per English Law



Formal>> a) Contracts of records



b) Contracts under seal

Simple