CONTRACT

Question 1

Indian Contract Act 1872

Answer 1

Law of contract is the branch of law which determines the circumstances under which promises made by the parties shall be legally binding on them

Question 2

Agreement Sec2(e)

Answer 2

Every promise or every set of promises forming considerations for each other is an agreement

Question 3

Promise as per section2(b)

Answer 3

When the person to whom the proposal is made signifies his assent thereto; the proposal is said to be accepted. A proposal when accepted, becomes a promise.

Question 4

Contract Sec2(h)

Answer 4

An agreement enforceable by law

Question 5

Consensus ad idem

Answer 5

The essence of an agreement is the meeting of the minds of the parties in full and final agreement. Before the agreement, there must be consensus ad idem of both the parties.

Question 6

Enforceable by law

Answer 6

Social obligations are not enforceable by law since the intention is not to create any legal relations. Legal obligations or obligations where the intention is to create a legal relation or legal enforceability is enforceable by law

Question 7

Obligation

Answer 7

An obligation is defined as a legal tie which imposes upon a definite person or persons the necessity of doing or abstaining from doing an act or acts

Question 8

Essential elements of a contract

Answer 8

Offer and acceptance
intention to create a legal relationship
lawful consideration
Capacity of parties
free and genuine
lawful object
agreement not declared void
certainty and possibility of performance
legal formalities

Question 9

on the basis of creation

Answer 9

EXPRESS- when the terms of contract is spoken or written in words at the time of formation of contract.
IMPLIED- which is inferred from the cods of acts or conduct of the parties.
QUASI- CONTRACT- it is not a contract. It is a contract created by law where the obligation is imposed on the party who is required to perform it.

Question 10

on the basis of execution/performance

Answer 10

EXECUTED- contract in which both the parties have performed their obligation.
EXECUTORY- (remains to be carried into effect) Both the parties have yet to perform their obligations.
UNILATERAL- contract in which only one party has to perform his obligation at the time of the formation, the other fulfilling his obligation t the time of contract or before the contract comes into existence.
BILATERAL- contract in which obligations of both the parties are outstanding at the time of the formation of the contract. also known as (contacts with executory consideration)

Question 11

basis of performance/ execution

Answer 11

UNILATERAL- contract in which only one party has to perform his obligation at the time of the formation, the other fulfilling his obligation t the time of contract or before the contract comes into existence.
BILATERAL- contract in which obligations of both the parties are outstanding at the time of the formation of the contract. also known as (contacts with executory consideration)

Question 12

on the basis of validity

Answer 12

voidable contract
void agreement
void contract
illegal agreement
unenforceable contract

Question 13

voidable contact

Answer 13

An agreement which is enforceable by law, at the option of one or more parties, thereto, but not at the option of other or others, is a voidable contract.

Question 14

a contract is voidable when

Answer 14

1. When a person promises to do something for the other person for a consideration, but the other person prevents him from performing his promise, then the contract becomes voidable at his option.
2. When the party promises to perform an obligation in a specified time, any failure on his part to perform the obligation within the specified time makes the contract voidable at the option of the promisee.

Question 15

Void agreement

Answer 15

an agreement not enforceable by law is said to be void. it leads to nullity. it is void ab intio. eg: agreement with a minor and agreement without consideration.

Question 16

Void contract

Answer 16

A contract which ceases to be enforceable by law becomes void when ceases to be enforceable by law. (initially it is enforceable but later becomes void). eg: when a war breaks out between the importing and exporting country

ceases- come to an end

Question 17

Illegal agreement

Answer 17

An illegal agreement is one which transgress a basic public policy, or which is criminal in nature , or which is immoral

transgress- go beyond the limits

Question 18

Unenforceable contract

Answer 18

A contract which cannot be enforced in a court of law because of some technical issue like absence of writing or where the remedy is barred by lapse of time.

Question 19

Offer

Answer 19

It is the proposal made by one party to another to enter into a legally binding agreement with him.

Question 20

Specific offer

Answer 20

when an offer is made to a specific person, it can be accepted only by that person

Question 21

General offer

Answer 21

When an offer is made to the world at large

Question 22

Legal rules as to offer

Answer 22

1. offer must be such as in law is capable of being accepted and giving rise to legal relationship
2. terms of offer must be unambiguous, definite, and certain and not loose and vague
3. an offer must be distinguished from
   - a declaration of intention and announcement
   - an invitation to make an offer or do business
4. offer must be communicated
5. offer must be made with a view to obtaining the assent
6. offer should not contain a term the non- compliance of which may be assumed to amount to acceptance
7. a statement of price is not an offer

assent- official agreement to do something

Question 23

Tender

Answer 23

A tender is an offer and maybe either-
a definite offer to supply specified good or services, or
a standing offer- agreement to supply goods between the supplier and the buyer

Question 24

Cross Offers

Answer 24

When two parties make identical offers to each other in the ignorance of the each other’s offer, the offers are cross offers. No contract arises from them.

Question 25

Acceptance

Answer 25

act of assenting by the offeree to an offer

Question 26

Who can accept an offer?

Answer 26

particular offer- when an offer is made to a particular person, it can be accepted only by that person and not a substitute of the person.
general offer- can be accepted by any person to whom the offer is made

Question 27

Legal rules as to acceptance

Answer 27

1. it must be absolute and unqualified
2. it must be communicated to the offeror
3. it must be according to the mode prescribed or usual and reasonable mode
4. it must be given within a reasonable time
5. it cannot precede an offer
6. it must show an intention on the part of the acceptor to fulfill terms of the promise
7. it must be given by the party or the parties to whom the offer is made.
8. it must be given before the offer lapses or before the offer is withdrawn
9. it cannot be implied from silence

Question 28

Mode of communication of offer, acceptance or revocation

Answer 28

The offer, acceptance or revocation may be communicated by words spoken or written, or by conduct

Question 29

When does an offer comes to an end

Answer 29

1. by communication of notice of revocation
2. by lapse of time( not accepted within the prescribed time)
3. by non-fulfillment by the offeree of a condition precedent to acceptance
4. by death or insanity of the offeror
5. if a counter offer is made to it
6. provisional acceptance
7. if an offer is not accepted according to the prescribe or usual mode
8. if the law is changed