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Dr. D. S. Sengar
Professor and Chairman, Legal Management Group
Indian Institute of Management Lucknow
Why Law of Contract? • To ensure expectations created by promise • To develop confidence that rights existing today will be enforced tomorrow • To protect and enforce contractual rights • To regulate the behavior of other parties • To ensure that freedom of contract is not misused Where to apply ? • Every activity of the commercial world • Foundation for other branches of commercial law .
• What is idea behind the contract ? • Meeting of mind through offer and acceptance • Common consensus/ mutuality of mind .
performance. risks and missing terms before signing an agreement • Thus.CONTRACT : LAW & MANAGEMENT • Modern Economy rest in law • In today’s business world contracts are a necessity • Numerous laws. government and organizations need to understand: intricacies involved in contract formulation. enforcement & the remedies in case of breach • Parties need to know the strengths. interpretation. review. weaknesses. negotiation. regulations and unforeseen events make contracts complicated • Business. final agreement should be effective and enforceable .
.Contract management • Process which ensures that both parties to a contract fully meet up their respective obligations in order to deliver business and operational objectives • An understanding of legal issues in contract formulation and management will helps: • To avoid the pitfalls in contracting • To make it easier to deal with lawyers and arbitrators • To guarantee for avoiding loss and profitability to the organization.
• .What is a Contract? • • An agreement enforceable by law is contract An agreement is set of promises forming the consideration for each other A Contract is an agreement which is intended to be enforceable at law and -is constituted by acceptance of an offer -to do or to abstain from doing some act.
• Contracts generally can be written. using formal or informal terms. a particular thing in exchange for something of value. or to refrain from doing. or entirely verbal.• A contract is an agreement between two or more persons: • (individuals. organizations or government agencies) • to do. businesses. .
there's a "breach" and certain remedies for solving the differences are available. what. where. • If one side fails to live up to his/her part of the bargain. . when.the who.• The terms of the contract . and how of the agreement define the binding promises of each party to the contract.
enter into a binding contract • Consideration .Key elements of a binding contract • A meeting of the minds between the parties demonstrating they both understand and agree to the essentials of the deal -rights and obligations : not only communication of intention • Competent Parties . . No side can obtain something without providing something in exchange.Legal competency. generally.something of value in exchange.A drugged or mentally-impaired person and Minors cannot.
• Intension to create Legal relationship: • No obligation if parties never intended to create legal relationship. even there is acceptance and consideration • Lawful object: Agreement fulfilling all conditions must not be unlawful object • Putting the deal down on paper : to avoid future misunderstandings and disputes (although oral contracts are also valid) • Every agreement and promise enforceable at law is contract .
Why Contract Management : • Allow the parties an opportunity to: • Clearly define their obligations to and expectations from each other • Limit their liability • Lay out payment terms • Divide up business risks • Make sure each side understands its responsibilities .
. • Have regular project meetings: to ensure that everything is going according to plan and to solve any problems as they arise.Management of Contract After contract is concluded. • Avail Contract management advice : for most effective contract management job in the most effective manner possible. It is important to comply legal and contractual requirements • Monitor performance: • Both parties should check that the other is fulfilling its obligations .timescales and payment plans are being adhered to.
not enforceable . it will amount to counter offer . mails and other documents evidences you need should things deteriorate into a breach of contract and enforcement actions become necessary.• Identify yourself whether a legal issues is involved before resorting court and hiring an advocate and manage them before they legal problem • Maintain Records to avoid business and reputation loss : have contact document . • Do not change contract conditions unilaterally.