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What is a contract?
Section 2(h) An agreement enforceable by law is a contract. Thus, Contract = Agreement + Enforceability at Law
Agreement?
Section 2(e)
Promise/(s) Promise/(s)
= Agreement
(in exchange for)
Promise?
Section 2(b) Promise = Proposal/Offer + Acceptance
Proposal?
Section 2(a) Expression of willingness With a view to seek the assent of the other Thus, mere expression of willingness doesnt constitute offer/proposal.
Acceptance
Section 2(b) Giving of assent to the proposal. Enforceability by Law Agreements which are not enforceable Illegal/unlawful agreements, e.g., to smuggle/to kill Social Agreements (Balfour vs. Balfour)
Kinds of Contracts
x
Void Valid
Illegal Unlawful Unenforceable
x Voidable x
x
x x
Valid Contract
Section 10 To be a valid contract, it must satisfy the following: 1. Offer and Acceptance 2. Consensus-ad-idem (Meeting of minds) i.e., persons must agree to the same thing in the same sense and at the same time. 3. Intention to create legal relationship as against social relationship or illegal/unlawful relationship.
4. Free and Genuine Consent, i.e., free from coercion undue influence fraud misrepresentation mistake 5. Parties competent to contract 6. Lawful consideration and object, i.e., something in return and that must be lawful.
Valid Contract
(Object and Consideration usually overlap. However, there may be difference at times e.g., object may be to kill competition and for that purpose in view, a senior manager of the competitor may be paid a certain amount to give unrealistically high quotation.) Here: Object is to kill competition. Consideration is : (i) payment of money (ii) giving high quotations
Valid Contract
7. Agreement not declared void. 8. Certainty of Meaning: e.g. sale and purchase of 100 tonnes of oil. But which oil? Thus, agreement being uncertain not valid. But, if the seller deals only in one kind of oil and one variety, then it shall be valid since it is capable of being made certain.
Valid Contract
9. Possibility of performance: Impossibility whether known to the parties or not, renders a contract invalid. 10.Necessary legal formalities: e.g. sale-deed of immovable property.
Illegal Agreement
1. Unenforceable
transactions unaffected.
Thus, if offer is addressed to A, B cannot accept it. Case Law: Boulton vs. Jones
Communication of Revocation
Communication of revocation (of offer or acceptance) is complete:
As against the person who makes it when it is put into the course of transmission. As against the person to whom it is made, when it comes to his knowledge.
Pre-fixed Damages
Exemplary Damages
Nominal Damages
Penalty
Liquidated Damages (What can be recovered is actual loss or amount prefixed, whichever is less)