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Assignment # 2
Topic: Essentials ingredients of valid contract Submitted to: Sir. Javed Baanday Submitted by: Sana Ejaz
Dept: MBA-(SS) - IV Dated: 8th Dec 2011 Fatimah Jinnah Women University Rawalpindi
Contract:
A contract is an agreement between 2 or more persons intended to create a legal obligation between them and to be legally enforceable. The essentials of a valid contract are that the parties must have had contractual capacity; must have reached agreement on all the material terms of the contract; must have intended the agreement to be legally enforceable, as opposed to merely a social or moral obligation; and the agreement must not be objectionable by virtue of illegality, impossibility, or the fact that it is contrary to public policy. Some particular kinds of contract may require to be drawn up in a specific form.
exemption clause seeks to modify A's liability, either by total exclusion or by limitation. A may say, "You will have no remedy". For instance, the owner of a car park may seek to incorporate in his contract with those using the car park, a statement that "Cars parked in this car park are parked entirely at the owner's risk and the management will not be responsible for any loss or damage howsoever caused" A may more modestly say "Your remedy is not absolute."For example, an exemption clause may restrict B to damages where he would otherwise have had a right to treat himself as discharged, or it may impose some limit in money or time such as, "Claims for lost laundry limited to $5 per item", or, "The company will not honor any claim unless received within 7 days of the accident". For the purpose of this report, exemption clauses may be described as those terms that exclude or restrict obligations or liability or rights and remedies. Some are manifestly designed to achieve one or more of those objects. Others, although apparently intended for some other purpose, may be capable of having the same effect. In my view the following would clearly operate as exemption clauses : (a) Terms imposing a liability in consequence of the exercise of a right or remedy; (b) Terms imposing a time-limit shorter than that fixed by the general law for the enforcement of a right or remedy; (c) Terms imposing a time-limit on action necessary before any right, remedy, duty or liability arise; (d) Terms altering the onus of proof or providing that one matter is conclusive evidence of another; (e) Any provision by virtue of which one person has to indemnify another from the consequence of the former person's having exercised a right or remedy, since such a provision restricts the exercise of the right or remedy; (f) Any provision that a dispute is to be determined by one of the parties and that his decision is to be final; (g) Any clause that provides for the submission of a dispute to an arbitrator before recourse to the courts, since such a clause restricts the avenues of redress available to the parties; Exemption clauses are often used by a stronger party against a weaker or less
sophisticated party. As between two parties of equal sophistication and bargaining power, an exemption clause may represent a true agreement as to the price and risk undertaken by each party; as between parties of unequal standing, such as a company and a consumer, the clause may be imposed so as to deny the customer's normal expectations. Similarly, in many cases parties have no real option but to accept the terms offered to them because of the impracticality of negotiating an amendment to the contract.