1. Define contract and agreement. What are the essential elements of a contract?

Contract means an agreement enforceable by law concluded between two or more parties for
performing or not performing any work. A contract is a voluntary agreement between two or more
parties that a court will enforce. The rights and obligations created by a contract apply only to the
parties to the contract and to anyone else.

A mutual understanding between two or more legally competent individuals or entities about their
rights and duties regarding their past or future performances and consideration is defined as an
agreement. While an agreement usually leads to a contract, it could also be an executed sale, a gift or
other transfer of property, or a promise without a legal obligation.

Essential elements of a contract:

1. Offer and Acceptance:

 Contract exists whenever a person advances a proposal to a person, who accepts it.
 Offer can be specific or general.
 Contract does not exist if no acceptance is received within the specified period of time.
 The person who offers a proposal cannot bind the person with the statement that if the
notice of rejection is not given then he shall be deemed to accept the offer.
 No contract exists if the offeror dies or become insane before the proposal is accepted.

2. Consideration:

 It includes the cause, motive or impelling influence that induces a contracting party to enter
into contract.
 It is defined as something with value that is exchanged by the contracting parties.

3. Capacity to Contract:

 For a contract to be legal and valid, all the parties entering into contract must be capable.
 According to contract act, idiots, drunkards, insane and children below 16 years are not
capable of signing a contract.

4. Lawful Purpose:

 The contract is invalid if the two parties agree to perform a job against the law of country.

5. Possibility of Performance:

 If two parties agree up on impossible jobs, the contract is invalid.

6. Free Consent:

 Contract should not involve fraud, undue influence and deceit.

7. Certainty:

 The contract that cannot be carried out because of various reasons are not valid.

8. Legal Relationship:
  There should be a clear intention of parties to enter into a contract with all the necessary
documents.

9. Written:

 Verbal agreement cannot be considered as a contract.

 Contract should be written agreement.

10. Two or More Competent Parties:

 Contract is made between two or more parties.

2. You are asked to evaluate and provide certificates to a user committee of an irrigation canal
work in Dadeldhura. You found that the canal is excavated by a backhoe excavator and
completed as per plan. As per public participatory provision in the Act it is prohibited to use
heavy equipment at work, because the motivation of public participation is to generate
employment and labor based. The UC requested you to provide the certificate because the
young people were not available in the village in those days, thus they used the equipment.
Discuss the situation.
3.
a) Facts
- Irrigation work is completed according to specifications.
- Public participatory provision prohibits use of heavy equipment at work.
- The contractor used backhoe excavator on the grounds that young people were not
available.
b) Immediate Action
- Confirm the contractors claim that youths were not available in the village.
c) Alternative and Consequences
- Don’t certify due to non-compliance of public participatory provision in the act. (This will
make the construction process longer and the gross expense increases.)
- Allow and certify this. (Encourages contractor to not follow public participatory act
seriously in the future.)
d) Discussion
- The situation gives rise to moral dilemma.
- As per the ethical decision making, the priority should be:
i. Society
ii. Service
iii. Cost
- On non-certification of this project, the benefit to the society is delayed. Also, the cost
of the project increases which ultimately affects the end-user and the government.
- On certification, the contractor gets away with non-compliance of essential provision for
public participation according to the contract, and this is non-allowable.
- Based on these grounds, I would take the following initiatives:
i. Firstly, I would check if the claim of youth not being present in the
community is true. If this was truly the case, then I would evaluate and
certify this project. I would warn them to pre-inform the authority about
 this issue and get approval before moving forward to use backhoe
excavator.
ii. If the case was not true then, I will not certify this project and act a fine or
any other measures specified in the contract will be taken in case of non-
compliance with the Act. After the fines are paid then the certification
process can move forward.