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BUSINESS LAW

CIA-II ESSENTIALS OF A CONTRACT

SUBMITED TO PROF. SAKLESH


DEPT OF MANAGEMENT STUDIES,
CHRIST UNIVERSITY

ON 14 July 2009

BY SYED IMRAN (07D18-46)


BBM-V-A
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I. Rent Agreement

Offer and Acceptance


There must be two parties to an agreement i.e. One party making the offer and the other
accepting it. The terms of the offer must be definite and acceptable, absolute and unconditional.
The acceptance must also be according to the mode prescribed.

In this contract:

The parties involved are :

• Ms. Mahaboobi the lessor who is the offerer

• Mr. Mohammad Firoz the lessee who is the offeree

Intention to create legal relationship


For a valid contract, both the offerer and offeree must have an intention to create a legal
obligation. Both the parties should fulfill their side of promises, in order to save themselves from
consequences of breach of contract.

In this contract:The lessor Ms. Mahaboobi who is the absolute owner of the building has made
an offer to let the lessee Mr. Firoz use the house on rental basis for the time period of 11 months
from 20-12-2008 to 20-11-2009.

Lawful Consideration
For a valid contract, consideration may be some benefit to other party. Consideration means
advantage or benefit moving from one party to the other. It is the essence of the bargain. It is a
price paid for the promise made by one party to another. Contract will be valid when both parties
get something.

In this contract:

The lessor offers to let out the premises for a consideration of Rs. 2500 as a monthly rent, where
as the lessee agrees to pay the rent regularly by on or before 15th of every month.
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Capacity of the parties


A contract is valid only when both parties are normal. Every member should be competent
enough fulfill the necessities of the contract.

In this contract:

Both the parties are competent to enter into contract and satisfy the given conditions.

Free and Genuine consent


A contract is valid only when both the parties agree on the same things in same sense and
manner. Consent must be free. The parties are said to be of the same mind when they agree about
the subject matter of the contract in the same sense and in the same time.

In this contract:

There is a free and genuine consent between both the parties as all of them has willingly sighed
the contract and there is no coercion, undue influence, fraud, misinterpretation, mistake, etc.
involved in the agreement. Ms. Mahaboobi and Mr. Firoz have signed and indicated that they
accept the contract.

Lawful Object:
A valid contract also demands that the object for which contract is being made should not be
illegal, immoral and against public.

In this contract:

The object of the agreement is lawful as it not forbidden by law, it is not illegal, immoral or
opposed to public policy, and therefore, it is enforceable by law. The rent as well as the security
deposit is legal and enforceable by law.
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Agreement not declared void


A contract may be oral or written. It depends on value of the asset. The more the value, the more
chances of getting into a written form.

In this contract:

This type of an agreement hasn’t been declared void under Section 24 to 30 of the INDIAN
CONTRACT ACT or by any other legal authority. This contract was drafted at Ms. Mahaboobi’s
residence.

Certainty and possibility of performance


The contract must be certain and vague or definite. A valid contract also demands that asset must
be specified, full information should be given. The terms of the agreement must also be such as
are capable of performance as law does not compel to do what is impossible.

In this contract:

The terms of this agreement have been very clearly specified in writing by both parties,
including the agreement and the consideration in return, and also nothing specified in the
contract is impossible to perform.

Legal formalities
The agreement may be oral or in writing. Where it is to be in writing, it must comply with the
necessary legal formalities as to writing, stamping, registration and attestation. Further, an
agreement is to be made in the presence of requisite witness. If the agreement does not comply
with these legal formalities, it cannot be enforced by law.

In this contract:

This agreement is written and all legal formalities have been complied with which include
stamping, registration and attestation.
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II. Agreement of Sale

Offer and Acceptance


There must be two parties to an agreement i.e. One party making the offer and the other
accepting it. The terms of the offer must be definite and acceptable, absolute and unconditional.
The acceptance must also be according to the mode prescribed.

The parties involved are:

• Shri Javid Sharif (here in after refered to as “Vendor”),

• Shri Syed Haneef (here in after refered to as “Purchaser”)

Intention to create legal relationship


For a valid contract, both the offerer and offeree must have an intention to create a legal
obligation. Both the parties should fulfill their side of promises, in order to save themselves from
consequences of breach of contract.

In this contract:

The vendor has offered the site for sale to the purchaser.

Lawful Consideration
For a valid contract, consideration may be some benefit to other party. Consideration means
advantage or benefit moving from one party to the other. It is the essence of the bargain. It is a
price paid for the promise made by one party to another. Contract will be valid when both parties
get something.

In this contract:

Shri Javid is selling the BDA property to Shri Syed Haneef for a consideration of Rs. 480000.
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Capacity of the parties


A contract is valid only when both parties are normal. Every member should be competent
enough fulfill the necessities of the contract.

In this contract:

Both the parties are competent to enter into contract and satisfy the given conditions.

Free and Genuine consent


A contract is valid only when both the parties agree on the same things in same sense and
manner. Consent must be free. The parties are said to be of the same mind when they agree about
the subject matter of the contract in the same sense and in the same time.

In this contract:

There is a free and genuine consent between both the parties as all of them has willingly sighed
the contract and there is no coercion, undue influence, fraud, misinterpretation, mistake, etc.
involved in the agreement. Shri Syed Haneef and Shri Javid both have arrived at a mutual
concent.

Lawful Object
A valid contract also demands that the object for which contract is being made should not be
illegal, immoral and against public.

In this contract:

The object of the agreement is lawful as it not forbidden by law, it is not illegal, immoral or
opposed to public policy, and therefore, it is enforceable by law. Selling property at agreed price
is legal and enforceable by law.

Agreement not declared void


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A contract may be oral or written. It depends on value of the asset. The more the value, the more
chances of getting into a written form.

In this contract:

This type of an agreement hasn’t been declared void under Section 24 to 30 of the INDIAN
CONTRACT ACT or by any other legal authority. This contract is provided by consent of both
parties.

Certainty and possibility of performance


The contract must be certain and vague or definite. A valid contract also demands that asset must
be specified, full information should be given. The terms of the agreement must also be such as
are capable of performance as law does not compel to do what is impossible.

In this contract:

The terms of this agreement have been very clearly specified in writing by both parties, including
the agreement and the consideration in return, and also nothing specified in the contract is
impossible to perform. If Shri Javid fails to transfer the property to Shri Syed Haneef then certain
actions can be taken which are accepted by both parties.

Legal Formalities
The agreement may be oral or in writing. Where it is to be in writing, it must comply with the
necessary legal formalities as to writing, stamping, registration and attestation. Further, an
agreement is to be made in the presence of requisite witness. If the agreement does not comply
with these legal formalities, it cannot be enforced by law.

In this contract:

This agreement is written and all legal formalities have been complied with which include
stamping, registration and attestation.