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Introduction
Law includes all the rules and principles which
regulate our relations with other individuals and
with the State.
The State regulates the conduct of its people by
a set of rules, which to be followed by the
people.
Such rules of conduct, if recognized by theState and enforced by it on people, are termed
as Law.
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Object of Law
To establish socio-economic justice and remove
the existing imbalance in the socio-economic
structure.
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CHARACTERISTICS OF LAW
1. Law is body of rules and principles relating to
actions of individuals.
2. Law is the guidance or conduct of persons-both
human and artificial.3. Law is imposed.
4. Enforced by state.
5. Two basic ideas involved in law.
(i) To maintain some form of social order in group and
(ii) To compel members of the group to be within that
order
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CONSTITUTIONAL LAW OFINDIA.
Came in force on January 26,1950.
All public authorities viz. Legislative,
administrative and judicial take their powers
directly or indirectly from it & constitution
derives its authority from the people.
Fundamental rights available
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Essentials of Law
There are certain essentials which must be present in
law in order to make it effective. These are:
(i) Predictability,
(ii) Flexibility and
(iii) Reasonable application and coverage.
Law must be such that one is enabled to predict with
some accuracy the legal consequences of an action.For example, business people enter into contracts on
the premise that if the other party fails to keep its
promise, they would have certain remedies under the
law.
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Cont
Law must be flexible in the sense that it must not be so
rigid and unchanging as to be impossible to mould to
the present. And, if at a later stage, it is found that the
existing law is incapable of tackling certain changes,then it must be accommodate them by amendments
thereto.
Law must be reasonable both in its application and
coverage. Wide publicity should be given to the lawenacted so as to give an opportunity to those affected
by it to know its requirements, and consequences for
non-compliance of those requirements.
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BRANCHES OF LAW
1. Constitutional law
2. Administrative law
3. Criminal law4. Civil Law
5. International law
6. Commercial/Mercantile law.
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Nature of Mercantile Law
It is used to denote that branch of law which
is concerned with such matters as are usually
the subject of what may be called ,mercantile
transactions-
Deals with contractual situations and the right
and obligations arising out of mercantile
persons like-Single individual, a partnership, a joint stock company
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Sources Of Mercantile Law
1. English Mercantile Law
2. Statute Law
3. Judicial decisions or the system of precedents4. Customs and usages
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English Mercantile Law
Main sources of the law is the common law of
England as modified and supplement by Equity and
Statute Law.
Common Law:1. It refers to a system of law based on English customs, usages
and traditions which were developed over centauries.
Equity: It is separately from common law is based upon concept of
justice developed by the judges.Statute Law: Law laid down in the act of Parliament.
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Nature of Contract
It is that branch of law which determines the
circumstances in which promises made by
parties to a contract shall be legally binding on
them.
Its rules define the remedies that are available
in a court of law against a person who fails to
perform his contract. It may be said that the law of contract is to
ensure the realization of reasonable expectation
of the parties who enter into the contract.
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THE INDIAN CONTRACT ACT, 1872
The Act deals with-
1. The general principles of the law of contract ( Sec 1-75)
2. Some special contracts ( Sec 124- 238 )
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INTRODUCTION
Law of contract deals with such
promises which create legal
obligations
Excludes obligation which are
not contractual in nature
Law of Contact deals with the
promises given for some value.
This value is called
consideration
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Definition of Contract
A contract is an agreement made between two
or more parties which the law will enforce.
Sec 2(h)- a contract is an agreement
enforceable by law.
Salmond- an agreement creating and defining
obligations between the parties.
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Contract
Contract consist of two element-
1. Agreement
2. Enforceability by law
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Agreement and Contract
Agreement
Offer+ Acceptance
May not create legal
obligation All agreements are not
contracts
Agreement is a wider
concept
Agreement is not a
concluded or a binding
contract
Contract
Agreement+Enforceability
Necessarily creates legal
obligation All Contracts are agreement
Contract is a specie of an
agreement
Contract is Concluding andbinding
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An Obligation which does not have its origin in
agreement does not give rise to a contrac
Some of such obligations are:
1. Torts or civil wrongs
2. Quasi-contracts
3. Judgement of Courts
4. Relationship between husband and wife,
trustee and beneficiary
i.e status obligations.
These obligations are not contractual in
nature, but are enforceable in the court of la
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Law of contract creates Jus inpresonam & Jus in rem
Jus in personam:
It means a right against or in the respect of a
specific person.
Jus in personam is available against particular
person
Jus in rem:
It means a right against or in respect of a
thing. Jus in rem is available against the world
at large
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Essentials Element of A Valid Contract
Sec- 10: All agreement are contracts if they are
made by free consent of parties competent to
contract, for a lawful consideration and with a
lawful object and are not expressed declared tobe void.
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Essentials Element of A Valid Contract
1. Offer and acceptance
2. Intention to create legal relationship
3. Lawful Consideration
4. Capacity of parties competency
5. Free and genuine consent
6. Lawful Object
7. Agreement not declared void
8. Certainty and possibility of Performance
9. Legal formalities
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1. Proposal and Acceptance:
When one person signifies to another his willingness to do orabstain for doing anything, with a view to obtaining the assentof that other person to such act or abstinence, he is said tomake a proposal.
When the person to whom the proposal is made signifies hisassent thereto, the proposal is said to be accepted. A proposalwhen accepted becomes a promise.
2. Consideration:
When at the desire of the promisor, the promisee or any otherperson has done or abstains from doing or does or abstainsfrom doing something or promises to do or to abstain fromdoing something such act is called a consideration for the
promise.
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Every contract consists of two parts: (1) promise and (2)Consideration for the promise. An agreement withoutconsideration is void. An agreement is a contract, only if it ismade for a lawful consideration and with a lawful object.
The consideration or object of an agreement is unlawful if
It is forbidden by law
Is of such nature that, if permitted, it would defeat theprovisions of any law
It is fraudulent
It involves or implies injury to the person or property ofanother
The court regards it as immoral or opposed to public policy.
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3. Capacity ofParties:
Sec. 11 of the act states that every person is competent tocontract who is of the age of majority according to the law towhich he is subject, and who is of sound mind and is notdisqualified from contracting by any law to which he is
subject.4. Free Consent:
The parties must be ad-idem, i.e., both the parties must agreeupon the same thing in the same sense. Consent of partiesmust be free from coercion, undue influence, fraud,
misinterpretation or mistake.5. Must not be declared void:
A void agreement is not enforceable by law. It has no legalsanctity, which are opposed to public policy like agreement inrestraint of trade, or in restraint of marriage or in restraint of
legal proceedings.
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6. Writing and registration:
Oral contract is a valid contract. However, the contract mustbe in writing and registered, if so required by law, for e.g.,mortgage, lease, MOA, AOA, etc. registration is compulsory
in respect of certain contracts under the Indian RegistrationAct, 1908.
7. Legal Relationship:
Agreements which create legal relations or are capable ofcreating legal relations are contracts. There must be common
intention of the parties to create legal relations in order toconstitute a contract.
8. Certainty:
The terms of contract must be clear and must not be vague.
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9. Possibility of performance:
The contracts must be capable of being performed.
10. Enforceable by law:A contract in order to be valid must be enforceable by law
which element distinguishes agreement and contract.
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Classification of Contracts
1. According to Validity:
Voidable contract
Unenforceable contract
Void contract Void agreement
Illegal agreement
2. According to formation:
Express contract Implied contract
Quasi contract
E- Commerce contract
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Classification of Contracts
3.According to performance
Executed contract
Executory contract
Unilateral or one-sided contract
Bilateral contract
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Voidable Contract
When one of the parties to the contract has notexercised his free consent.
All voidable contracts are induced by coercion, undueinfluence, fraud or misrepresentation.
Example: a contract is treated as voidable at the optionof the party whose consent has been obtained bycoercion or undue in or fraud or misrepresentation.
Example: X threatens to kill Y if he does not sell hishouse for Rs. 1,00,000 to X. Y sells his house to X andpayment. Here, Ys consent has been obtained bycoercion and hence this contract is voidable at theoption of Y.
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Void Contract
In other words a void contract is a contract
which was valid when entered into but which
subsequently became void due to
impossibility of performance, change of lawor some other reason.
Example: X offers to marry Y. Y accepts
Xs offer. Later on Y dies. This contract wasvalid at the time of its formation but became
void on the death of Y.
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Void Agreement
An agreement not enforceable by law is said to
be void.
It does not create any legal rights or obligations.
Example: An agreement with minor or an
agreement without consideration.
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Illegal Argeement
The illegal agreement is one the subject of
which is unlawful.
Example: X agrees to Y Rs. 1,00,000 if Y
kills Z and claim Rs. 1,00,000. Y cannot
recover from X because the agreement between
X and Y is illegal as its object is unlawful.
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Unenforceable Contract
Which can not be enforced in a court of law
because of some technical defect like absence
of writing, remedy has been barred by lapse of
time.
E.g., unstamped promissory note.
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Express contract
Express contract is one which is made by words
spoken or written
Example: X says to Y Will you buy my
car for Rs. 100000? Y says to X I am ready
to buy your car for Rs. 100000. It is an express
contract made orally.
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Implied Contract
Implied Contract is one which is made otherwisethan by words spoken or written. It is inferred fromthe conduct of a person or the circumstances of theparticular case.
Example.:
X, a coolie in uniform picks up the luggage of Y tocarry it from railway platform to the taxi withoutbeing asked by Y to do so and Y allows it. In thiscase there is an implied offer by the coolie and animplied acceptance by the passenger. Now, there isan implied contract between the coolie and thepassenger and the passenger is bound to pay for theservices of the coolie.
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Quasi Contract
Quasi contracts arise out of obligations enjoyed
by one person from the voluntary acts of the
other which are not intended to be performed
gratuitously.
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Executed contract
Where both the parties to the contract have
fulfilled their respective obligation under the
contract.
Example: X offers to sale his car to Y for
Rs. 50000. Y accepts Xs offer. X delivers the
car to Y and Y pays Rs. 50000 to X. It is an
executed contract
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Executory Contract
Where both the parties to the contract have
still to perform their respective obligations.
Example: X offers to sale his car to Y for
Rs. 50000. Y accepts Xs offer. If the car has
not been delivered by X and the price has not
been paid by the Y, it is an executory contract.
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Unilateral Contract
A unilateral contract is one wherein at the time
the contract is concluded there is an obligation
to perform on the part of one party only.
Eg. A makes payment for bus fare for his
journey from Mumbai to Pune. He has
performed his promise. It is now for the
transport company to perform its promise.
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Bilateral Contract
A bilateral contract is one wherein there is an
obligation on the part of both to do or to refrain
from doing a particular thing. In this sense,
bilateral contracts are similar to executorycontracts.