LEGAL ASPECTS OF BUSINESS ASSIGNMENT

VINU UNNITHAN - 200101611229

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I. 1. Define a contract. Explain the essential elements of a valid contract.

ANS Contract is an agreement. Agreement comprises of two things, proposal or offer by
one party and the acceptance thereof by the other party. Thus, an accepted offer is an
agreement.
Essential parts of a sound contract:
To distinguish contracts from different kinds of guarantees and agreements, courts have
established basic elements that are necessary for a contract to exist. A contract is also
lawfully outlined as a voluntary, legal, instrument created by persons with the right
capability. It ought to include: (1) an offer; (2) an acceptance; and (3) consideration, or
an exchange of value. There are legal exceptions to most of these conditions, and all of
them are subject to interpretation in the courts. Some contracts do not meet these
requirements, such as implied contracts.

MUST BE VOLUNTARY
Contracts not entered into voluntarily area unit void in a position for instance, an
organization may tell a provider that it absolutely was considering ending their account
if, among future 10 minutes, the provider didn’t sign a contract to supply materials at an
exact value. If the provider signed the agreement, it might be ready to persuade the
courts that it did thus below undue influence, and thus wasn't bound by the contract’s
terms. In general, contracts created below force, undue influences, fraud and untruth
area unit void in a position by the victim.

MUST BE LEGAL
Contracts also are void if they involve a promise that's bootleg or violates public policy.
for example, a contract concerning the sale of bootleg medicine is unenforceable.
Similarly, contracts that area unit legal however area unit not within the public interest
could also be trashy. for example, a consent that an organization needs a customer to
pay a awfully high rate of interest on season funds can be thought of invalid by the
courts. Or, suppose an organization contracts with a client to sell provides to him that he
uses to grow marijuana. If the corporate additionally tells him a way to grow the bootleg
substance, the contract would become unenforceable as a result of the agreement
promoted the violation of a statute.

ORAL CONTRACTS

Contracts don't need to be written to be enforceable in court. In fact, most oral

contracts area unit de jure enforceable. However, they're clearly rather more tough to
prove. moreover, most states have adopted “statutes of frauds,” that specify bound
styles of contracts that has got to be in writing.
Examples of contracts that generally comprise the statues of frauds embody agreements
associated with the sale of land, contracts for the sale of products on top of $500, and
contracts during which one person agrees to perform the duty of another person.
nonetheless even those contracts don't need to exist in usual manner. In fact, an easy
memoranda or receipt could also be decent. There area unit many exceptions to the
statutes of frauds. for example, once one party would suffer serious losses as a results of
reliance on an oral agreement, the statute of frauds could also be waived.

MENTAL STATE AND CORRECT AUTHORITY

Even if a contract is voluntary, legal, and written, it is void if the person that makes the
agreement does not have the mental and legal capacity to do so; hence, a mentally
retarded individual or a child could not be bound by an agreement. But a person without
the authority to make an agreement may also void a contract. For instance, suppose that
a very keen salesman representing a ball bearing company signed an agreement with a
buyer to supply one billion ball bearings to be delivered in 24 hours. The contract could
be worthless if the salesman was acting outside of his authority to commit the company
to that agreement.

OFFER
In addition to being voluntary, legal, written, and made by persons with proper capacity,
contracts usually must possess three basic mechanisms: an offer, an acceptance, and
consideration. An offer is a promise to perform an act conditioned on a return promise
of performance by another party. It is recognized by a specific proposal communicated
to another party. Once a legal offer has been made, the offeror is bound to its terms if
the other party accepts. Therefore, the offeror must clearly indicate whether the
proposal is a bid or some other statement, such as an invitation to negotiate. The offeror
may specify certain terms of receiving, such as time limits, and even withdraw the offer
before the other party accepts.

ACCEPTANCE
Acceptance, the second basic requirement, is legally defined as “a manifestation of
assent to the terms made by the offeror in the manner invited or required by the offer.”
As with offers and offerors, the courts look for intent to contract on the part of the
acceptor. The difference is that the offeror may stipulate terms of acceptance with
which the other party must comply. If the offeree attempts to change the terms of the
offer in any way, a rejection is implied and the response is considered a counteroffer,
which the original offeror may reject or counter. As with most rules regarding contracts,
exceptions exist.

CONSIDERATION
Even if an offer is accepted, it must be consummated by consideration for a legally
enforceable contract to exist. The requirement of consideration serves an important
purpose. It protects the promissory from being liable for granting, or relying on,
gratuitous promises. For example, suppose that a person told her roommate that she
would always pay the entire rent for their apartment. If she later changed her mind, she
could not be held liable for the rent because she had neither asked for, nor received,
anything in exchange for the promise. Had the other roommate promised to clean the
apartment in exchange for the roommate’s promise to pay the rental fee, an
enforceable contract would exist.

2. What do you understand by “capacity to Contract”? Who are the persons

 disqualified by law from entering into a contract?

Capacity to contract is the competence of the parties to make a contract. As per Section
11 of the Indian Contract Act, 1872 , Every person is competent to contract who is of the
age of majority according to the law to which he is subject, and who is of sound mind
and is not disqualified from contracting by any law to which he is subject. There are few
people apart from minors and people with unsound minds who cannot enter into a
contract. i.e. do not have the capacity to contract. The reasons for disqualification can
include, political status, legal status, etc. Some such persons are foreign sovereigns and
ambassadors, alien enemy, convicts, insolvents, etc.

ii.

1. A minor fraudulently represented to a money lender that he was a major and executed a
mortgage deed for Rs 20,000/-. Has the moneylender any right of action against the minor for the
money lent?

Ans: As per section 10 and 11 of the Contract Act build the minors agreement void and so
the mortgage wasn't valid. If the cash loaner pleaded for the refund of the number from the
minor. it had been control that the cash advanced to the minor cannot be recovered as a result of
the minor's agreement was void.
In the given case, the minor borrowed a total from a lender by mortgaging his property.
But as per the provisions, the minor isn't competent to contract and any contract entered are void
and hence, the mortgage here isn't valid. Also, because of the void contract cash loaner won't
succeed in convalescent the number from minor

2. A tells his wife that he would commit suicide, if she did not transfer her personal assets to him.
She does so under this threat. Can the wife avoid the contract?

Ans: The mate will avoid the threat. it's in reality a private selection and (except on humanitarian
basis) the mate may also have legal approach and take an honest call.