LAW ASSIGNMENT

BY: RAUNAK DUTTA

MBA(A)

LAW OF CONTARCT
 INTRODUCTION
A contract is a legally binding document that recognizes and governs
the rights and duties of the parties to the agreement. A contract is
legally enforceable because it meets the requirements and approval
of the law. A contract typically involves the exchange of goods, service,
money, or promise of any of those.

Section 2(h) of the Indian Contract Act 1872 provides

that ------
“An Agreement Enforceable by Law is a Contract”.
Therefore, in a contract there must be:
1) An Agreement
2) The Agreement must be enforceable by law
An agreement comes into existence whenever one or more persons
promise to one or others, to do or not to do something.
According to Section 2(e) “Every Promise and every set of
promises,
forming the consideration for each other is an agreement .
All Agreements cannot be enforced by court of law. For e.g. – An
agreement to play card, or go to cinema. Thus, these are not
contracting
 TYPES OF CONTRACT
Contract can be classified into Four Broad Divisions. These four
divisions are further sub divided into different categories.

On Basis of Formation
EXPRESS CONTRACT: - Express Contract is one which is expressed in
words spoken or written.
IMPLIED CONTRACT: - An Implied Contract is a legally binding
obligation that derives from actions, conduct or circumstances of one
or more parties in an agreement. It has the same legal force as an
express contract. The implied contract, on the other hand, is assumed
to exist, but no written or verbal confirmation is necessary.
QUASI CONTRACT: - A Quasi Contract is not a real contract but it
resembles a contract. There is no intention of parties to make contract
but law imposes it. Even in the absence of contract certain social
relationships give rise to certain obligations to be performed.

TIME OF PERFORMANCE

EXECUTED CONTRACT: - These are the contract where the parties

perform their obligations immediately as soon as the contact is formed .
EXECUTORY CONTRACT: - In this contract the obligations of the
parties are to be performed at a later time

Parties of the contract

Bilateral contract: - There must be at least two parties to the
contract. Therefore, all contract is Bilateral.
Unilateral contract: - In certain contracts one party has to fulfil his
obligations whereas the other party has already performed his
obligations. Such a contract is a called Unilateral Contract.

BASIS OF VALIDITY OR
ENFORCEABILITY

VALID CONTRACT: - An Agreement which satisfies all the essential

elements of a contract and which is enforceable through the courts is
called a Valid Contract.
VOID CONTRACT: - According to Section 2(g) “An Agreement not
enforceable by law is said to be void”. A void agreement has no legal
effect. I t confers no right on any person and creates no obligations.

VOIDABLE CONTRACT: - According to Section 2(I) “An Agreement

which is enforceable by law at the option of one or more of the
parties thereto, but not at the option of the other or others is a
Voidable Contract”. This means where one of the parties to the
agreement is in a position or is legally entitled or authorized to avoid
performing his part, then the agreement is treated and becomes
voidable.

ILLEGAL CONTRACT: - An Agreement is one which is against a law in

force in India is called Illegal Contract. All illegal contract are voids but
all void agreements are not necessary illegal.

ESSENTIALS OF
CONTRACT
An agreement becomes enforceable by law when it fulfils certain
conditions. These conditions which may be called as the Essentials of a
Contract are explained on next page:
 OFFER AND ACCEPTANCE

There must be a lawful offer by one party and a lawful acceptance of

the offer by the other party or parties. The adjective “lawful” implies
that offer and the acceptance must conform to the rules laid down in
the Indian Contract Act.

Intention to create legal relationship

There must be an intention among the parties that the agreement shall
result in or create legal relations.

LAWFUL CONSIDERATION
Subject to certain exceptions, an agreement is legally enforceable only
when each of the parties to it gives something and gets something.
Something given or obtained is called consideration. The consideration
may be an act or forbearance or a promise to do or not to do
something. But only those considerations are valid which are “lawful”
meant by “Lawful Consideration”.

CAPACITY OF PARTIES
The parties to an agreement must be legally capable of entering into an
agreement, otherwise it cannot be enforced by court of law. Want of
capacity from minority, lunacy, idiocy, and drunkenness and similar
other factors. If any of the parties to the agreement suffers from such
disability, the agreement is not enforceable by law, except in some
special case.
Free consent
In order to be enforceable, an agreement must be based on the free
consent of all the parties. There is absence of genuine consent if the
agreement is induced by coercion, undue influence, mistake,
misrepresentation and fraud. A person guilty of coercion, undue
influence, etc. cannot enforce the agreement.

LEGALITY OF THE OBJECT

The object for which the agreement has been entered into must not be
illegal or immoral or opposed to public policy.

Certainty
The agreement must not be vague. It must be possible to ascertain the
meaning of the agreement, for otherwise it cannot be enforced .

POSSIBILITY OF PERFORMANCE
The agreement must be capable of being performed. A promise to do
an impossible thing cannot be enforced
VOID AGREEMENTS
An agreement so made must not have been expressly declared to be
void under the Indian Contract Act.

WRITING REGISTRATION AND LEGAL

FORMALITIES
An oral contract is a perfectly good contract except in those cases
where writing and / or registration is required by some statue. In India
writing is required in case of lease, gift, sale and mortgage of
immovable property. Registration is compulsory in case of documents
coming under purview of Section 17 of the Registration Act. The terms
of the oral contract are sometimes difficult to prove. Therefore,
important agreements are usually entered into in writing even in case
where writing is not compulsory.
 CONTRACT -1
LIFE INSURANCE
POLICY
This contract showcases a contact of Life Insurance Policy between two
parties. The insurance contracts are Indemnity Contracts. These
contracts apply to insurances where the loss suffered can be measured
in terms of money. Life Insurance Policy is the contract between the
insurer and the insured; known as the policyholder, which determines
the claims which the insurer is legally required to pay to the
beneficiaries of the policy in exchange for a payment, known as the
premium. The insurer promises to pay for loss caused by perils covered
under the policy language. There are 3 parties involve in an Insurance
Contact. These three parties are: -
1) The Insurer
2) The Insured
3) The Beneficiaries or Nominee
Under an insurance contract the Insurer undertakes to provide
coverage for the risk specified in the contract, and to provide
settlement or benefits for loss arising upon the occurrence of a specific
future event after the starting date of risk coverage. In the Insurance
Policy the Insured is the Policy Holder whose life has been covered
under the said insurance policy. The insured need to pay the premium
in order to get the risk coverage for this life throughout the policy term.
In life insurance, the Beneficiary is the person or entity entitled to
receive the claim amount and other benefits upon the death of the
benefactor or on the maturity of the policy.

LIFE INSURANCE POLICY

LIC
(LIFE INSURANCE CORPORATION OF INDIA)
 SUMMARY
TYPE OF CONTRACT

The Insurance contracts are Indemnity Contracts. These contracts apply

to insurances where the loss suffered can be measured in terms of
money. The purpose of an insurance contract is to leave you in the
same financial position you were in immediately prior to the incident
leading to an insurance claim.
 PARTIES INVOLVED
INSURER: LIC (LIFE INSURANCE CORPORATION OF INDIA)
INSURED: - SANJIB KUMAR DUTTA

NOMINEE: - MAHUYA DUTTA

PROMISOR AND
PROMISEE

PROMISOR: - LIC

PROMISEE: - SANJIB KUMAR DUTTA

CONSIDERATION