2 -contract- law and management (1)

8/13/2019 2 -Contract- Law and Management (1)

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Contract : Law & Management

Dr. D. S. SengarProfessor and Chairman, Legal Management Group

Indian Institute of Management Lucknow


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Why Law of Contract?

To ensure expectations created by promise

To develop confidence that rights existing today will beenforced tomorrow

To protect and enforce contractual rights

To regulate the behavior of other parties

To ensure that freedom of contract is not misused

Where to apply ?

Every activity of the commercial world

Foundation for other branches of commercial law


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What is idea behind the contract ?

Meeting of mind through offer and acceptance

Common consensus/ mutuality of mind


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CONTRACT : LAW & MANAGEMENT

Modern Economy rest in law

In todays business world contracts are a necessity

Numerous laws, regulations and unforeseen events make contracts

complicated

Business, government and organizations need to understand:

intricacies involved in contract formulation, interpretation, review,negotiation, performance, enforcement & the remedies in case ofbreach

Parties need to know the strengths, weaknesses, risks and missingterms before signing an agreement

Thus, final agreement should be effective and enforceable


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Contract management

Process which ensures that both parties to a contractfully meet up their respective obligations in order todeliver business and operational objectives

An understanding of legal issues in contract formulationand management will helps:

To avoid the pitfalls in contracting

To make it easier to deal with lawyers and arbitrators To guarantee for avoiding loss and profitability to the

organization.


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What is a Contract?

An agreement enforceable by law is contract

An agreement is set of promises forming the

consideration for each other

A Contract is an agreement which is intended

to be enforceable at law and

-is constituted by acceptance of an offer

-to do or to abstain from doing some act.


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A contract is an agreement between twoor more persons:

(individuals, businesses, organizations or

government agencies) to do, or to refrain from doing, a particular

thing in exchange for something of value.

Contracts generally can be written, usingformal or informal terms, or entirely verbal.


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The terms of the contract- the who, what,where, when, and how of the agreement -define the binding promises of each party

to the contract.

If one side fails to live up to his/her part of

the bargain, there's a "breach" and certainremedies for solving the differences areavailable.


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Key elements of a binding contract

A meeting of the mindsbetween the partiesdemonstrating they both understand and agreeto theessentials of the deal -rights and obligations : not onlycommunication of intention

Competent Parties-Legal competency- A drugged ormentally-impaired person and Minors cannot, generally,enter into a binding contract

Consideration- something of value in exchange. Noside can obtain something without providing somethingin exchange.


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Intension to create Legal relationship: No obligation if parties never intended to create legal relationship.

even there is acceptance and consideration

Lawful object:Agreement fulfilling all conditions must not beunlawful object

Putting the deal down on paper: to avoid futuremisunderstandings and disputes (although oral contracts are alsovalid)

Every agreement and promise enforceable at law is contract


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Why Contract Management :

Allow the parties an opportunity to:

Clearly define their obligations to and expectations from eachother

Limit their liability

Lay out payment terms

Divide up business risks

Make sure each side understands its responsibilities


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Management of Contract

After contract is concluded, It is important to complylegal and contractual requirements

Monitor performance:

Both parties should check that the other is fulfilling itsobligations - timescales and payment plans are beingadhered to.

Have regular project meetings: to ensure that

everything is going according to plan and to solve anyproblems as they arise.

Avail Contract management advice: for most

effective contract management job in the mosteffective manner possible.


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