INTRODUCTION

LAW OF
CONTRACT
What is a Contract ?
A legally binding agreement. In other words
A promise or set of promises which the law will
enforce.
The agreement will create rights and
obligations that may be enforced in the courts.
The normal method of enforcement is an
action for damages for breach of contract.
Steps involved in Contract
Offer and its acceptance
Free consent of both parties
Mutual and lawful consideration for
agreement
It should be enforceable by law. Hence,
intention should be to create legal
relationship. Agreements of social or
domestic nature are not contracts
Steps involved in Contract
Parties should be competent to contract
Object should be lawful
Contract should not have been declared
as void under Contract Act or any other
law.
Jus in Personam and Jus in rem
Consensus ad idem
obligation


Form of Contracts
1) Written
2) Oral
3) Partly oral and written
2 classes of Contract
Contracts by Deed
A deed is a formal legal document signed, witnessed and
delivered to effect a conveyance or transfer of property or
to create a legal obligation.
Simple contracts
Simple contracts are informal contracts and may be made
in any way in writing, orally or they may be implied
from conduct
Bilateral & Unilateral
Bilateral contracts
A promise by one party in exchanged for a promise by another
party
A one to one contract
Example : Sale of goods contract
The Buyer promises to pay the price
The Seller promises to deliver the goods
Offeror or
Promisor
The person who
make the offer
Offeree or Promisee
The person to whom
the contract was made
Unilateral contracts
A promise by one party in exchanged for an action by
another party
A one to all contract
Example :
X promises a reward to anyone who will find his lost wallet.
X bound himself to the promise, but no one is bound to search for
the lost wallet. But if Y, having seen the offer, recovers the wallet
and returns it, he is entitled to the reward.
1 Offeror
Many
Offerees
Essential elements of a Contract
1) Agreement
One party make the offer, another party accepts the offer
and both achieve consensus ad idem (meeting of the
minds)

2) Consideration
Both parties must have provided consideration, ie, each
side must promise to give or do something for the other.

3) Intention to create legal relations
The parties must have intended their agreement to have
legal consequences. The law will not concern itself with
purely domestic or social agreements.
4) Capacity
The parties must be legally capable of entering into a
contract.

5) Absence of Vitiating factors
Absence of factors that are going to invalidate a contract,
ie : duress or undue influence, mistake, misrepresentation,
illegality
Enforceability
Void contracts
the whole transaction is regarded as a nullity, as though as
there has been no contract between the parties.
Any goods or money obtained under the agreement must
be returned.
Where items have been resold to a 3
rd
party, they may be
recovered by the original owner.


Features of Void agreements

An agreement made by incompetent
parties (Minor/Lunatic Person) is void.
Agreements which have unlawful
consideration is void.
Agreement with a unlawful object is void.
Agreements made without consideration is
void.


Features of Void agreements
An agreement the terms of which are
uncertain is void.
An agreement by way of wager
(betting/gambling) is void.

Features of Void agreements
An agreement contingent upon the
happening of an impossible event is void.
Agreement to do impossible acts is void.
Agreement in restraint of legal
proceedings is void.


Voidable contracts
An agreement which is enforceable by law at the option of
one or more of the parties thereto, but not at the option of
the other or others, is a voidable contract
A voidable contract will operates as a valid contract
unless and until one of the parties takes steps to avoid it.
Anything obtained under the contract must be returned,
insofar as this is possible.
If goods have been resold before the contract was avoided,
the original owner will not be able to reclaim them.

Classification of Contracts
Classification according to validity
Voidable contracts
Void contracts
Illegal contracts
Unenforceable contracts
Classification according to formation
Express contracts
Implied contracts
Quasi contracts
E-commerce contracts

Classification of Contracts..
Classification according to Performance
Executed contracts
Executory contracts
Unilateral or one-sided contracts
Bilateral Contracts
Classification according to formation
Formal Contracts (a) Contracts of Record: is either a
judgment of a court or recognisance (b) Contracts under
seal: A contract under seal is one which derives its binding
force from its form alone.
Simple contracts:


Unilateral Contracts or one-
sided contracts ..
A contract in which only one party has to fulfill his obligation
at the time of the formation of the contract, the other party
has fulfilled his obligation at the time of the contract or
before the contract comes into existence.
(Contracts with the executed consideration)
Bilateral contracts:
In which obligations on the part of both of the parties to the
contract are outstanding at the time of the formation of the
contract.
(Contracts with the executory consideration)

End