Introduction:
Here is some laws of business just read and understand it is at below.
A contract is an agreement to do or not to do an act. It is a legally binding agreement, which is enforceable at law.
Salmond says "Contract is an agreement creating and defining obligations between the parties."
Halsbury defines it as, "an agreement between two or more persons which is intended to be enforceable at law and is constituted by the acceptance by one party of an offer made to him by the other
party to do or to abstain from doing some act."
In the words of Sir William Anson, "A legally binding agreement made between two or more persons by which rights are acquired by one or more to acts or forbearances on the part of other or others."
Section 2 (h) of the Contract Act defines a Contract as "an agreement enforceable by law."
Sir Fredrick Pollock says,
"Every agreement and promise enforceable at law is a contract."
Thus, there are two essential elements of a contract:
(1) An Agreement. (2) Its enforceability at law.
These two components together constitute the basis for a contract and are explained as follows:
1. Agreement. An agreement is defined in Section 2 (e) as "every promise or every set of promises forming the consideration for each other."
A promise is defined in section 2 (b) as, "a proposal when accepted becomes a promise."
An agreement involves proposal or offer by one party and acceptance of the same by the other party. It requires existence of two or more persons i.e. plurality of persons because a person cannot enter into an agreement with himself.
It also implies that the parties have a common intention about the subject-matter of their agreement. Two parties should be thinking of the same thing in the same sense at the same time. Thus, an agreement is the outcome of two consenting minds i.e.'consensus ad idem.'
Thus, Agreement = Offer + Acceptance
2. Enforceable at Law. An agreement to become a contract must give rise to a legal obligation. The common acceptance formed and communicated between the two parties must create legal
relations and not merely the relations which are purely social or domestic in nature.
Example. Mr. Mukesh invites Mr. Vijay to a dinner at his house. Mr. Vijay accepts the invitation. It is purely social agreement. If Mr. Vijay fails to arrive at the dinner or Mr. Mukesh has to go out and is not available at his place at the dinner time due to some important work, either of the parties cannot sue other for not fulfilling the promise, the reason being, there was no intention between two parties to create any legal obligation.
In above circumstances there was, in the eye of law no contract between Mukesh and Vijay. Contracts must not be the sports of an idle hour, or mere matters of pleasantry, never intended by the parties to have any serious effect whatever.
Other kind of obligations which do not constitute a contract are the agreements made between husband and wife. Such agreements are purely domestic and are not intended to create legal relationships.
THE LEADING CASE ON THIS POINT IS: BALFOUR V. BALFOUR (1919)
Mr. Balfour was employed in Ceylon. Mrs. Balfour owing to ill health, had to stay in England and could not accompany him to Ceylon. Mr. Balfour promised to send her £ 30 per month while he was abroad. But Mr. Balfour failed to pay that amount. So Mrs. Balfour filed a suit against her husband for recovering the said amount. The court held that it was a mere domestic agreement and that the promise made by the husband in this case was not intended to be a legal obligation.
In this case, the intention not to create a legal obligation was clear from the conduct of the parties.
If the parties specify or the circumsta-
nces indicate that the parties intend to create legal relationship through it-even an agreement between husband and wife will be legally enforceable. On the other hand, if the two parties rule out legal obligation expressly the agreement will not be enforceable though it may be a trade agreement.
Thus, Contract = Agreement + Enforceability at Law
Therefore, all contracts are agreements but all agreements are not contracts.
Law of contracts is not the whole law of agreements nor the whole law of obligations. Obligation is defined as the 'vinculum juris' or the bond of legal necessity which binds together two or
more determinate individuals.
It follows, therefore, that in a contract,
1. There are at least two parties-one party under an obligation and the other party entitled to enforce that obligation.
2. Obligation must be in respect of doing or abstaining from doing definite acts.
3. The obligation must relate to legal matters and not to social affairs.
There are several agreements which do not give rise to legal obligations and therefore are not contracts. Similarly, certain obligations do not nessarily spring from agreements but are enforceable
at law. Sources of such obligations are:
1. Torts or civil wrongs;
2. Quasi-Contracts
3. Decrees by Courts etc.
Law of contract applies to contractual obligations. Salmond says, "Law of contract is not the whole law of agreements nor is it the whole law of obligations. It is the law of those agreements."
Law of contract creates rights in personam as distinguished from 'rights in rem' means a right against in respect of a thing. This right is available against the whole world. 'Right in personam' means right against or in respect of a particular person/persons
Examples : 1. If Mr. X owns a plot of land and Mr. Y is the immediate neighbour, Mr. X has a right of complete possession and enjoyment of land not only against Mr. Y but against the whole world. This right is night in rem.
2. Mr. A is entitled to receive a sum of money from B. This right can be exercised by Mr. A only and that -1.6 right is right in rem Law of contract creates rights in personam as distinguished from rights in rem. personam' means a right against or in respect of a particular person/persons.
too against Mr. B only. This is right in personam.
ESSENTIAL ELEMENTS OF A VALID CONTRACT
All agreements are not contracts. Only that agreement which is enforceable at law is a contract. An agreement which is not enforceable at law cannot be a contract. Thus, the term agreement is more wider in Scope than contract. All contracts are agreements bull all agreements are not contracts.
An agreement, to be enforceable by law, must possess the essential elements of a valid contained in Section 10 of the Indian Contract Act. According to Section 10, "All agreements contracts if they are made by the free consent of the parties, competent to contract, for a latwdt
consideration and with a lawful object and are not expressly declared to be void." As the details these essentials form the subject- matter of our subsequent chapters, it is proposed to discuss them in
brief here.
According to section 10, noted above, an agreement to be entorceable must fulfil the following conditions:
1. An agreement between the two parties. An Agreement is the result of a proposal or an offer by one party and itsacceptan-
ce by the other party.
2. Agreement should be made between the parties who are competent to contract.
3. The agreement should be made by the consent of the parties.
4. There should be a lawful consideration and lawful object.
5. The areegement must not have been expressly declared to be void under the Contract Act.
6. In some special cases, as provided by the law, the agreement should be in writing or in epresence of witness or should be registered.
The following are the essential ele-
ments of a valid contract :
1. Offer and Acceptance. In order to create a valid contract, there must be a lawful offer by one party and lawful acceptance' of the same by the other party. The adjective 'lawful means 'offer ana its acceplance must confirm to the rules laid down in the Indian Contract Act regarding valid' offer and acceptance' and its communication'.
Case law :
2. Intention to create legal Relationship in case, there is no such intention on the part of parties, there is no contract. Agreements of social or domestic nature do not contemplate legal relations.
Conclusion :
Here is some laws of the business topic for learners here i explained about this in very simple way.
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