Iqra Lecture 2

8/7/2019 Iqra Lecture 2

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Business LawsBusiness LawsBusiness LawsBusiness Laws



Contract Act, 1872

Definition of Contract by Pollack

³every agreement and promise enforceable at law is contract.´



Contract Act, 1872

Definition of Contract by Salmond

³a contract is an agreement creating and defining

obligations between the parties´



Contract Act, 1872

Definition of Contract by Sir William Anson

³a legally binding agreement between two or more persons

by which rights are acquired by one or more to acts orforbearance on the part of others.´



Contract Act, 1872

Definition of Contract u/s 2(h)

³An agreement enforceable by law is a Contract.´



Contract Act, 1872Contract = Agreement + Enforceability

Agreement = Offer + Acceptance

Enforceability = Legal obligations b/w parties

Agreement:

a. Plurality of persons

b. Consensus Ad idem.

Enforceability:

Social Agreements (No)

Legal Agreements (Yes)



ESSENTIALS OF VALID

CONTRACT

F L2

I P C2

A N



Ingredientsof a

Valid Contract



Valid Contract - FLIPCANS

�Free Consent

�Legal Relationship

�L

egalO

bject�In writing if required by Law

�Possible to Perform

�Consideration

�Capacity of the parties

�Agreement�Not Expressly declaredVoid

�Subject Matter



Formation of ContractFormation of ContractFormation of ContractFormation of Contract

By ConductBy Conduct



By Conduct

Mean

Body LanguageSilently allow other Person to enter into

A contract

Here words &

Written form are not

Shared b/w parties



Formation of ContractFormation of ContractFormation of ContractFormation of Contract

By WritingBy Writing



Usefulness of Written Contract

Documentary

Proof

No party can

Easily deny

Easily preserve

For a longer period

Less disputes

As some disputes arises as one party forgets

Law considers Written evidence more powerful than Oral



Contract

Purchases Service RentSales

Amount/ Goods both are immaterial.

Oral WrittenBy Conduct



Size of Amount and Goods

Not important

Rupee OneMillions

SmallLarge

Amount Goods



E

nforceabilityof theContract



Contract

Enforceability

Valid Void-able Void

Fully

EnforceableBy law/ court

Aggrieved

Party mayMake

Contract as

Can not be

EnforceableBy Court

Or Law



According to Enforceability1. Valid Contract

2. Voidable Contract

* Burden of Proof

3. Void Contact

*Impossibility of performance

**Subsequent Illegality

*** Rejection of a Voidable Contract

**** Impossibility of depending Event

4. Unenforceable Contract

5. Illegal Agreement

6. Void Agreement

Kind of Contracts



Formationof

Contract



Contract

Formation

ExpressedConstructive

Quasi

By Conduct

Implied Contract

Oral

Written



Kind of Contracts

� According to Formation

1. Express Contract

2. Implied Contract

3.Quasi Contract



Performanceof

Contract



Kind of Contracts� According to performance

1. Exectued Contract

2. Executory Contract

� According Parties

1. Unilateral Contract2. Bilateral Contract



Contract

Performance

Executory Executed



Executed Contract

Delivery

100% on

Spot

Payment

100% on

Spot



Executory Contract

Unilateral

Case -1

Payment

100% now

Delivery

Part now

Remainingin future

Case-1

Delivery

100%

Now

Full Delivery

in Future

Payment

Part now

Remainingin future

Full Payment

in Future



PARTICULARSAGREEMENTS CONTRACTS

EnforceabilityA void agreement is unenforceable

from the very beginning.

A void contract is

enforceable when it is

originally made. It becomes

un-enforceable later on.

EnforcedA void agreement can never be

enforced.

A void contract can be

enforced before its being un-

enforceable.

Restoration of

Benefit

In a void agreement the parties arenot entitled for restoration of

benefits which they have exchange

during the process of contract.

In a void contract the parties

are entitled for restoration of

benefits which they have

exchange during the

process of contract.

VOID

DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS



PARTICULARS ILLEGAL AGREEMENTS VOID AGREEMENTS

ProhibitedAn illegal agreement is prohibited

by law.

A void agreement is not

prohibited by law.

Punishable An illegal agreement is punishableA void agreement is not

punishable

NatureAn illegal agreement is also void

agreement

A void agreement is not

illegal agreement

Collateral

Agreement

A collateral agreement to an illegal

agreement is not enforceable.

A collateral agreement to avoid agreement is

enforceable.

DISTINCTION B/W ILLEGAL AGREEMENT & VOID CONTRACTS



PARTICULARS VOID AGREEMENTS VOIDABLE CONTRACTS

EnforceabilityA void agreement is un-

enforceable by law.

A voidable contract is a valid

contract and enforceable till

it is rejected.

DefectsA void agreement is void ab-initio

and its defects are incurable.

A voidable contract is not

void ab-initio and its defects

are curable.

Rights of Third

Party

In a void agreement even a thrid

party cannot acquire any right from

person claiming undr such a

contract.

In a voidable contract a third

party can acquire a right

from a person claiming

under such a contract.

Compensation

In a void agreement the person is

not entitled to compensation froloss arising due to non

performance of the agreement.

In a voidable contract a

person is entitled tocompensation for loss

arising due to non-

performance of the contract.

Collateral

Agrement

Collateral agreement to void

agreement is a void contract.

A collateral agreement to a

voidable contract is not a

void contract.

DISTINCTION B/W VOID AGREEMENT & VOID CONTRACTS

Iqra Lecture 2

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