Nature of contract

1. Corporate & Business Law
THE INDIAN CONTRACT ACT,
1872

2. WHAT IS LAW?
Law consists of rules that regulate the
conduct of individuals, businesses, and
other organizations within society.
Law means any rule of conduct, standard
or pattern, to which actions are required
to conform.

3. OBJECT OF LAW
Object of law is the creation and protection of legal rights to
maintain order in the society.
Keeping the peace.
Shaping moral standards.
Promoting social justice
Maintaining the status quo
Facilitating orderly change
Maximizing individual freedom

4. IGNORTIA JURIS NOT EXCUSANT
Ignorance of law is - NO EXCUSE
Every member of the society is expected
that his actions conform to a set pattern or
standard as reflected in legal rules.
For this purpose he is presumed to know
the legal rules. He cannot take the plea
that he did not know them.

5. Business Laws
Business law is also termed as commercial Law
and mercantile law.
Business law is generally used to denote that
portion of law which deals with rights and
obligations arising out of transactions between
mercantile persons.
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6. Cont…..
The term appears to be a convenient way of
grouping together the laws that should be regarded
important for men in business.
It includes following laws:
Law of contracts
Sales of goods act
Partnership act
Company law
Negotiable instrument act
Insurance act
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7. THE INDIAN
CONTRACT ACT,
1872

8. The Law of Contract
It is that branch of law which determines the
circumstances in which promises made by
the parties to a contract shall be legally
binding on them.
It defines:
Remedies available
Conditions under which remedies are
available

9. Nature of the Law of Contract
It does not lay down the duties and
responsibilities which the law will enforce
BUT,
It consists a number of limiting principles,
subject to which; the parties may create rights &
duties for themselves which the law will upload.

10. Law of contract
creates
jus in personam,
jus in rem

11. DEFINITION OF CONTRACT
Sec.2(h) “An agreement enforceable by
law.”

Contract =Agreement + enforceability by
law.
Agreement must create a legal obligation
or duty.

12. AGREEMENT
Sec. 2(e), “Every promise and every set of
promises, forming consideration for each
other”
An agreement takes place when an offer is
made by one person is accepted by the other.
All agreements are not contracts but all
contracts are agreements. (Balfour v/s Balfour)
Agreement = Offer + Acceptance

13. Agreement is a wide term
All agreements are not contracts
BUT
All contracts are agreements
(Social v/s Legal)
Consensus ad idem
Obligation

14. ESSENTIAL ELEMENTS OF VALID
CONTRACT
Offer and acceptance – Two parties, offer & acceptance
Intention to create legal relationship –
(Balfour vs. Balfour- domestic, social agreements )
Lawful consideration- cash,kind,act of abstinence
Capacity of parties – Competency
Free consent – without pressure (physical or mental)

15. Lawful object – The object of contract
is unlawful, if :
Immoral
Illegal
Opposed to public policy
Agreement not expressly declared void – agreements
must not be declared voidby law in force in the country
Certainty and possibility of performance
Legal formalities – In writing, properly stamped

16. 16
Classification of Contracts
Validity or
Enforceability
PerformanceFormation
Valid Contracts
Voidable Contracts
Void Agreement
Void Contracts
Unenforceable Contracts
Illegal contract
Express Contracts
Implied Contracts
Quasi contracts
Executed Contracts
Executory Contracts
Bilateral Contracts
Unilateral Contracts

17. CLASSIFICATION OF CONTRACTS…
According to validity
Valid contract – Agreement satisfying all the essentials.

Voidable contract – Consent of one party is not free.
( Aggrieved party, avoid in reasonable time). & Void at
option of that party only
Void contract – A valid contract when it was made but
subsequently it becomes void.

18. Illegal contract – An agreement which is forbidden by law
or against the policy of law is known as unlawful or illegal
agreement.
( smuggling, murder )
Void agreements - Void ab - initio …. From the very
beginning ( lack of one of the essentials)
Unenforceable contract – one which cannot be enforced
in a Court of law due to some technical defects

19. According to formation
Express contract – orally or in writing
Implied contract – by conduct or acts
Quasi contract – no intention of the parties
to create legal relationship. It is created by
law.

20. According to time of performance:
Executed contract – Both the parties have
performed.
Executory contract – Both the parties are yet to
perform. It can be partly as well.