A contract is an agreement between two entities or individuals, which serves as legal protection for both parties involved in a potential business deal. The contract is an agreement enforceable by law that offers personal rights and imposes personal obligations for the protection of the rights of the parties. The basic contract law depends on the conception of the creation of legal rights and obligations. These rights are completely personal in nature and enforceable by contract law.
Section 2(H) of the Indian contract Act, 1872 defines a contract as “An agreement enforceable by law” and the word agreement has been defined in section 2(e) of the act as “ Every promise and every set of promises, framing consideration for each other”. There are several types of contracts and they determine the rights and duties of both the parties to the contract. A specific type of contract regulates the risks and expenses. There are two different kinds of contracts which are fixed-price contracts and cost-reimbursement contracts. So basically, Contract= Agreement+ Enforceability.
Contracts in common law and civil law system
Contract law is largely codified or an obligation of civil law. In the courts of civil law, jurisdiction applies the articles of civil law for deciding in particular contracts. As the result, the civil law system the obligation is being primarily deductive in nature and applied the general principle of law.
In contradiction to civil law codes, in common law contracts develop standards, principles, and rules of law deductively govern the formation, performance, and termination of contracts.
Types of contract
There are several types of contracts on basis of validity, formation and performance are as follows:-
1.1- Valid contract
1.2- Void contract
1.3- Voidable contract
1.4- Illegal contract
1.5- Unenforceable contract
2.1- Express contracts
2.2- Implied contracts
3.1- Executed contract
3.2- Executory contract
3.2.1- Unilateral contract
3.2.2- Bilateral contract
Essential elements of Contract
- Agreement: A contract between two parties is an agreement, which is a result of an offer and acceptance that forms consideration for the parties involved in the agreement. Also Read Consideration In Contract
- Free Consent: The consent must be entered into by the parties on their own volition and without being forced or deceived i.e “agreements are contracts if they are made by free consent”. The contract must be free from the following:
- Undue influence
- Competency: It refers to the capacity of the parties to enter into the contract i.e competency of age; the parties to the contract must be of sound mind and are not disqualified from contracting as per law. That is they must not be:
- Of Unsound mind
- Disqualified to contract
- Consideration: It is the price for the promise. It is the return one gets for his act or omission section 2(d).
- Lawful object: The object for which contract is formed must be lawful under the contract act, 1872. It must satisfy the following conditions;
- Not forbidden by law
- Not defeat by any provision of law
- The purpose of the contract must not be fraudulent
- Court considers not as to be immoral or against public policy
- Not declared as void: The law should not expressly declare any provision of the given contract as void, such as contract in restraint of marriage, trade, or legal proceedings.
Others important elements of the contract
- Must constitute of contract i.e One proposes and other accepts the same
- Possibility of performing the contract
- Intention to create a legal obligation is a must.
The “E” word refers to commerce and is a shortened form of electronic. The effectiveness of E-contracts is based on electronically made contracts. They are legalized by IT ACT but still, the majority feels not secure while dealing online. The reason is being a lack of transparency in terms and conditions attached to the contract and the jurisdiction that arose during the pendency of a transaction.
Time to revocation of acceptance
- Acceptance with subsequent condition
- Acceptance of counter proposals
- Provisional acceptance
- Acceptance and withdrawals of tenders
- Letter of intent to accept
- Liability for failure to consider tender
- Non-compliance with requirements
- Certainty of terms
- Preventing tendering and blacklisting
Specific performance of a contract
It is an equitable relief given by the court to enforce against a defendant by the duty of doing agreed by the contract. Damages and specific performance are both remedies available upon breach of obligation by the parties to the contract and it provides pecuniary compensation for failure to carry out the terms of the contract.
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