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Transcript

Law of contract

By: Sneha Shrestha

Contents :

Overview

  • Meaning and Definitions of Contract

  • Essential Elements of Contracts

  • Nature Of Contract

  • The needs and Importance of

  • Contract

  • Differences between Contract and Agreement

definition

Meaning and definition of contract:

Contract is a legal agreement between or among two or more than two contracting parties to do or not to do something in certain prescribe or reasonable time. Contract is an outcome of the contracting parties about their liability, rights and duty.

“ Contract is an agreement between two or more persons , which creates an obligations to do or not to do a particular things.”

- Henry Compbell Black

“Contract is an agreement creating and defining obligation between the two parties or more person.”

- Salmond

Lesson profile

Some Essential Elements of Contracts that we will be discussing,

Essential elements

Elements

Essential elements :

  • At least two parties
  • Offer and acceptance
  • Consideration
  • Free consent
  • Legal objectives
  • Able to performance
  • Competent parties
  • Certainty
  • Intention to create legal relationship
  • Complete necessary legal formalities

Elements

1 . At least two parties :​

It’s the first element for making a contract. In all agreements there must be two parties . One party cannot create contract. There must be two parties one having rights and other under obligations. ​

2. Offer and acceptance :​

The party in accord with prevailing law proposes to the other party about the agreement is called proposer. The second party who has been proposed for contract must consent the offer according to the law. In this way after offering and consenting the proposal both of the parties are bound to perform the terms and conditions of the contract.​

3. Consideration:​

Consideration is a cost of promises between or among the contracting parties and It is a motivating factor to do or not to do any form of contract. There is a established principle that is in contract law, “ no consideration, no contract.” ​

4. Free Consent :​

It is a independent wheel of contracting parties to do or not to do any forms of contract. It is a meeting of the mind of both or all contracting parties in absence of free consent the contract can be void that is why it is known as voidable contract.​

5. Legal Objectives : ​

All objective in any form of contact, must be in legal order. In other words those contracts which is formulated in illegal objective which will be void. It is one of the essential elements to be a valid contract.​

Elements

6. Able to perform : ​

A performance of the contract is a most important element to be valid contract. Only after performing a contract the contracting parties will make confidence to achieve an exchange their respective promise. It is practical and legal commitment of contracting parties to conclude the contract . ​

7. Competent Parties:​

Component parties is the one of element to be a valid contract. Those parties who are able to the know the consequences of contract and similarly the party which are able to bear the duty and consequences of contract are known as compliment parties. They can perform the terms and condition of contract. ​

In other words except the minorities unsound minded person and the person disqualified by the law remains as incompetent parties to do a valid contract. ​

8. Certainty:​

Both the parties involved in a contract must clearly know about all the terms and conditions mentioned or amplified in it. Other wise, the contract becomes void. Therefore, the terms of the contract must be clear. Certain and limited. So, that the parties involved in it may have the knowledge about the meaning and sentiments of such contract.​

9. Intention to create legal relationship :​

Wherever or whenever agreement is made , if there is intention to create legal relationship , it can be the contract. Otherwise , in the absence of intention to retain legal relations, it cannot be the contract but merely becomes an agreement. When there is intention to keep or create legal relationship and the party is ready to bear the legal obligation created by the contract , the law suit can be filed in the court to seek legal remedy because it is the lawful contract.

10. Complete necessary legal formalities :​

Usually contracts are in the writing forms , but sometimes they can be unwritten and oral also. Where there is oral agreement by conduct between parties , in this condition there is no need to official seals , rectification ,registration and other terms and reference. For instance , written agreements is not complete by writing the terms and conditions ,it needs to be ratified ,officially registered and sealed. ​

Nature of contract:

nature of contracts

Essential

understandings

Contact is an agreement between two or more person on a particular matter or matters. ​

Contract creates legal and binding obligations between the parties . The parties acknowledge that they are under obligations and ready to perform these obligations.​

Contract establishes a course of actions between the parties which is to be performed by the parties.​

Contract provides certain remedies if things go wrong to the affected party. ​

Contract is reorganized and enforceable by law i.e. contract law.​

significance :

The needs and importance of contract.

significance

enumeration

Contract enlivens business, industrial activities.​

To regulate and execute domestic and international trade.

It is the base of business world, a company can't run in its absence.​

Contract deals with official agreements and declarations.

From contract there is the creation of economy and business activities as well as liabilities. ​

Contract practically executes the promises of the parties.​

Contact covering large scope it can be classified to;

i) General Contract​ ii) Special Contract ​

The development of the country is beyond imagination without development of trade industries.

Contract being inevitable it is hard to imagine activities to run in life. ​

Contract creates social and business relation.

Contract makes the contracting parties enable to stand on their promises.

The violator of contract needs to pay indemnity to opposing party if he seeks legal remedy in the court.​

variance :

These are some differences on contract and agreement.

analogy

difference

Contract

Agreement

All agreements are not contracts.

All contracts are agreement.

All agreements do not create legal obligations .

Contracts creates legal liability and​ obligations.

There is no need to have legal contents and consideration to be agreement.

Contracts holds legal contents and consideration.

There is no need to classify agreement​ since it has broader scope.

Contract is classified into general and specific.

All agreements have no legal status and​ there is no law to perform it.

Contract has legal validity and is​ followed accordingly.

difference

Contract

agreement

The scope of contract is narrow.

All agreements cant create mutual obligations to parties

Contracting party is obliged to perform ​liability.

The scope of agreement is broad and vast.

Contract is classified into general and specific.

There’s no legal obligation to perform ​liability

The victim of the contract finds legal remedy in the ​court.

In all agreements there is no legal remedy for the ​victim in the court.

It has certain and fixed measures

It does not have fixed measures. 

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