BUSINESS LAWS

Shumaila Chandni
Assistant Professor

Quantum School of Business,

Roorkee

Unit - 1
The Indian Contract
Nature
Contract
Act,of1872

Special Contracts

Classification
Offer & Acceptance
Capacity of parties to
contract
Indemnity
Free Consent
Guarantee
Consideration
Bailment & Pledge
Legality of object
Agency
Agreement declared
void
Performance of contract
Discharge of Contract
Remedies for breach of
contract
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Law of Contract
Object:
Branch of law which determines the
circumstances in which promises
made by the parties to a contract
shall
be legally
binding
them. is
Purpose
of the
law ofon
contract
to ensure the realization of
reasonable expectation of the
parties who enter into a
contract.
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The Indian Contract Act,

1872
Deals with
1. The general principles of the law of contract
Different stages in the formation of a contract
Its essential elements
Its performance or breach
Remedies for breach of contract

2. Some special contracts only

Indemnity & guarantee
Bailment & pledge
Agency

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Nature of the Law of

Contract
The parties to a contract, in a sense,
make the law for themselves.
So long as they do not infringe some
legal prohibition, they can make what
rules they like in respect of the
subject-matter of their agreement,
and the law will give effect to their
decisions.
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The Act is not exhaustive

Some of the contracts not dealt with
by the Act:
Partnership
Sale of goods
Negotiable instruments
Insurance, etc.

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Not the whole law of agreements

nor the whole law of obligations
There are several agreements which do
not give rise to legal obligations.
Also
There are certain obligations which do not
necessarily spring from an agreement.
Torts or Civil wrongs
Quasi-contracts
Judgments of Courts.

Law of those agreements which

create obligations, and those
obligations which have their sources
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in
agreements.

Creates jus in personam

not jus in rem

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Definition of Contract
Sec. 2(h) defines contract as an
agreement
enforceable
by law.
Enforceability
by Law

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Agreement & Promise

Promise
Sec. 2(b) defines 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
Agreement
Sec. 2(e) defines every promise and every
set of promises, forming consideration for each
other
Agreement = Offer + Acceptance
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Consensus ad idem
The parties to the agreement must
have agreed about the subjectmatter of the agreement in the same
sense and at the same time.
Unless there is consensus ad idem,
there can be no contract.
Hence, it is usual to employ the
language of offer and acceptance.
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Obligation
A legal tie which imposes upon a
definite person or persons the
necessity of doing or abstaining from
doing a definite act or acts.
May relate to:
Social Matters
All Matters
contracts are agreements
Legal

but
all agreements are not
necessarily contracts.
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Essential Elements of a Valid

Contract
1.
2.
3.
4.
5.
6.
7.
8.
9.

Offer and Acceptance

Intention to create legal relationship
Lawful consideration
Capacity of parties-competency
Free and genuine consent
Lawful object
Agreement not declared void
Certainty and possibility of performance
Legal formalities
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Classification of
Contracts

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