Business law - General Principles of Contract

The general principles of contract refer to the fundamental rules and guidelines that govern the creation, execution, and enforcement of contracts in legal systems. These principles ensure fairness and clarity in agreements between parties

1. BUSINESS LAW (GENERAL PRINCIPLES OF CONTRACT) Dr DINESH S Assistant Professor Department of Management Sciences Sri Ramakrishna College of Arts & Science (Autonomous) Coimbatore - 641 006 Tamil Nadu, India

2. Stranger to Contract ( Privity of Contract) Privity of contract refers to the relationship between the parties involved in a contract. In general, only parties who are directly involved in the contract (i.e., those who have made the agreement) can sue or be sued under it.A "stranger" to the contract, someone who is not a party to the contract, generally has no rights to enforce the contract or be bound by it, except in certain cases like contracts made for the benefit of a third party (e.g., third-party beneficiary contracts).

3. Wagering Agreements A wagering agreement is an agreement where two parties bet on the outcome of an uncertain event, with the stakes being money or something of value.Such agreements are generally void under Indian Contract Law (Section 30 of the Indian Contract Act, 1872) and unenforceable in courts, as they do not create any legal obligations but are based on pure chance.

4. Quasi-Contracts A quasi-contract refers to a situation where a contract is imposed by law, even in the absence of an agreement between the parties, to prevent unjust enrichment or to ensure fairness.These are not real contracts but are treated as contracts for the sake of justice. For example: Supply of necessities : When someone supplies necessities to a person who is unable to contract, the supplier can claim payment. Payment by mistake : If one party mistakenly pays money to another, the party who received the payment must return it.

5. Agreements Opposed to Public Policy An agreement that is opposed to public policy is one that undermines the interests of society, the public, or the legal system.Examples include agreements:That involve committing a crime. That restrict freedom of trade. That involve immoral or illegal activities. Restraint of marriage or trade.

6. Performance of Contract The performance of a contract refers to the fulfillment of the obligations laid down by the contract by the parties involved.Performance can be actual (when the terms are carried out) or attempted (when one party tries to fulfill their obligations but is unable to, often due to a breach by the other party).

7. Discharge of Contract Discharge of contract refers to the termination of the contractual obligations of the parties involved.A contract can be discharged in several ways: By Performance : The contract is completed according to the terms. By Agreement : Both parties agree to end the contract. By Frustration : When performance becomes impossible due to unforeseen circumstances. By Breach : One party fails to perform their obligations.

8. Modes of Discharge There are several ways a contract can be discharged: Performance : Both parties fulfill their obligations. Agreement : Parties mutually agree to cancel the contract. Impossibility : If performance becomes impossible due to an unforeseen event (e.g., destruction of the subject matter). Breach : One party fails to perform the contract. Novation : Substitution of a new contract in place of the old one. Waiver : One party voluntarily relinquishes their rights to enforce the contract.

9. Breach of Contract A breach of contract occurs when one party fails to fulfill their obligations as per the terms of the contract.Types of breach include: Actual breach : When the terms of the contract are not performed when they should be. Anticipatory breach : When one party clearly indicates they will not perform the contract in the future .

10. Remedies for Breach of Contract Remedies for a breach of contract are the legal solutions available to the injured party, which may include: Damages : Monetary compensation for losses. Specific performance : A court order requiring the breaching party to perform the contract. Injunction : A court order to stop a party from doing something that would breach the contract. Rescission : Cancellation of the contract, relieving both parties from their obligations. Quantum meruit : Payment for work or services performed where no contract exists, or the contract is unenforceable .

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