Friday, 6 December 2019

Unit 1: Laws of Contract

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                                          Unit 1: Laws of Contract


The law relating to contracts is contained in the Indian Contract Act, 1872.

For business executives, contract law is tremendously signify cant because it underlies or is related to all major areas of law affecting business.


A contract is an agreement, enforceable by law, made between at least two parties by which rights are acquired by one and obligations are created on the part of another.


If the party, which had agreed to do something, fails to do that, then the other party has a remedy.


Offer is not only one of the essential elements of a contract but it is the basic building block also.

Misrepresentation is also known as simple misrepresentation whereas fraud is known as fraudulent misrepresentation.


Mistake may be defi ned as an erroneous belief on the part of the parties to the contract concerning something pertaining to the contract.

The term consideration is used in the sense of quid pro que, i.e., “something in return”.


A lunatic is a person who is mentally deranged due to some mental strain or other personal experience.


An alien is a person who is a citizen of a foreign country.

A contract creates obligations.

‘Performance’ of contract means the carrying out of obligations under it.

Appropriation of payments means application of payments.


A breach of contract is one party’s failure, without a legal excuse, to live up to any of its promises under a contract.


A contract terminates by breach of contract.


If the promisor has not performed his promise in accordance with the terms of the contract or where the performance is not excused by tender, mutual consent or impossibility or operation of law, then this amounts to a breach of contract on the part of the promisor.

Acceptance: The act of giving consent to the proposal.

Coercion: The committing or threatening to commit any act forbidden by the Indian Penal Code.

Contract: A contract is an agreement, enforceable by law, made between at least two parties by which rights are acquired by one and obligations are created on the part of another.

Express Acceptance: When the acceptance has been signified either in writing or by words of mouth or by performance of some required act of the offered.

Formal Contract: The law gives special effect because of the formalities or the special language used in creating it.

Money Lending Transactions: The rate of interest being high, or that the borrower is in urgent need of money is not an evidence of undue influence.

Offer: An offer is synonymous with proposal.

Undue Influence: It consists in the improper exercise of power over the mind of one of the contracting parties by the other.

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