...Mailed on 23/12/13 BRIEF DISCUSSION ON CONTRACT ACT- 1872 According to Section 2 (h) of the Indian Contact Act, 1872, "A contract is an agreement enforceable by law”. A contract therefore, is an agreement the object of which is to create a legal obligation i.e., a duty enforceable by law. From the above definition, we find that a contract essentially consists of two elements: (1) An agreement and (2) Legal obligation i.e., a duty enforceable by law. As per section 2 (e) "Every promise and every set of promises, forming the consideration for each other, is an agreement." Thus it is clear from this definition that a 'promise' is an agreement. Section 2 (b) states that "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." An agreement, therefore, comes into existence only when one party makes a proposal or offers to the other party and that other party signifies his assent (i.e., gives his acceptance) thereto. In short, an agreement is the sum total of 'offer' and 'acceptance'. Example, A promises B to sell his horse for Rs. 10,000/-. The Law of Contract deals with such promises which create legal obligations. This excludes those promises made in common life which may be morally binding but creates no legal binding. Promises which do not give rise to legal obligations are not contracts. For example, if A promises B to attend the dinner and fails to attend then...
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...UNIT – I ➢ Essential elements of a valid contract. ➢ Essentials of a valid offer. ➢ Essentials of valid consideration. ➢ Stranger to consideration. ➢ “No consideration- No contract” – explain and give exceptions. ➢ Discuss the provisions of law relating to contract by minor. ➢ Agreements Opposed To Public Policy. ➢ Free consent. ➢ Legality of object and consideration 1. ESSENTIAL ELEMENTS OF A VALID CONTRACT 1. “All contracts are agreements but an agreement are not contracts” – Discuss? (OR) Essential elements of valid contract? Ans. Indian contract Act (I A), 1872, sec 2 defines a contract us “an agreement enforceable by law.” From the above definitation, the features of contract can be classified as 1. Agreement 2. Legal obligation. 1. Agreement: According to Sec2 (e), “Every promise or every set of promises forming consideration for each other” is called an Agreement. Therefore, AGREEMENT = OFFER + ACCEPTANCE CONTRACT =AGREEMENT+ENFORCEABILITY AT LAW FEATURES OF AN AGREEMENT: 1. Plurality of the parties 2. Consensus – ad-idem 3. Legal obligation 1. Plurality of the parties; for every agreement, there should be minimum two parties because one person alone cannot enter into an agreement with himself. 2. Consensus – ad-idem; the minds of both the parties must be in ad-idem, i.e., both...
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...Capacity to contract One of the essentials of a valid contract, mentioned in section 10, is that the parties to the contract should be competent to make the contract. According to section 11 : “Every person is competent to contract who is of age of majority according to law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.” It means that the following three categories of persons are not competent to contract. 1. A person who has not attained the age of majority, i.e., one who is minor. 2. A person who is of unsound mind 3. A person who has been disqualified from contracting by some law. Although the above mentioned categories of persons are not competent to contract, yet they may sometimes be making some bargains, taking some loans, or be supplied with some goods by third parties, or be conferred with some benefits etc., the position of such person in such like situations is being discussed below. THE POSITION OF A MINOR Who is a minor ? A person who has not attained the age of majority is a minor. Section 3 of the Indian Majority Act, 1875 provides about the age of majority. It states that a person is deemed to have attained the age of majority when he completes the age of 18 years, except in case of a person of whose person or property a guardian has been appointed by the Court in which case the age of majority is 21 years. Nature of a minor’s agreement As noted above...
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...take in the outside world is somehow governed by law For Example, purchasing a new apartment or starting a new business. Contract Law: it can be stated as “the body of law that administrates oral and written agreements associated with exchange of goods, money and property.’’ A contract law includes certain other aspects such as the nature of contract, contracts limits, freedom of contract and ending period of contract. Contract law is an agreement between individuals and is upheld by law and penalties are enforced if the contract is void or tempered with once the agreement has been signed. The reason contract law exists is to form a mutual understanding between the parties who are involved to avoid future problems and changes by either property without both ends agreement. Without contract law, all the agreements established between the parties will become impractical and meaningless and both sides would try to change the agreements along the way making it harder and difficult for them to execute their plans properly. UK Law: The United Kingdom’s constitution is in unwritten form. Body of UK law is purely based on statue, traditional rights and common law. Alteration comes about as time changes due to modified parliament acts. Some of the Malaysian laws are from the English law act. Common law and equity law form part of Malaysian law. Parliament made the UK law and they have total control on regarding it, meaning they can alter the act in any manner they like. Even though...
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...Introduction to contract …………………………………………………………....1 2. Age of majority …………………………………………………….……..1 3. What contract that a minor can enter?......................................................................2 4. Contract of necessaries ……………………………………………………………3 5. Contract of scholarships………………………………………………………..….4 6. Contract of employment ………………………………………………………..…4 7. Contract of marriage ………………………………………………………..…5 8. Reference ……………………………………………………..……6 Introduction to contract Contract (or informally known as an agreement in some jurisdictions), can define as an agreement having lawful object entered into voluntarily by parties or a legally binding or enforceable agreement. Each of whom intends to create one or more legal obligations between them. The legislation in Malaysia governing contract is the Contract Act 1950(Act 136), which revised in year 1974. Contracts are an integral part of our daily lives. There are constantly being entered into by individuals with other individuals or business, as well as businesses with other businesses, to sell or transfer property, to provide and receive services and other rights and obligations created (Lee Mei Pheng & Ivan Jeron Dette, 2014). Contracts are closed connected with our daily life, for example, the sales and purchase of goods in based on contract, the employer hiring employees is based on contract, the bank provide...
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...“Contracts made by minors are void”. Explain this statement and discuss its exceptions. Contracts entered into by a minor, one below the age at which state law deems persons to possess capacity to contract, currently 18 years old in most states are generally voidable by the minor-party, even if he misrepresented his age. A minor can furthermore avoid contractual obligations for a reasonable time after attaining the age of majority. However, if he fails to disaffirm within a reasonable time, the contract will become binding against him. Disaffirmance: Disaffirmance is a contractual obligation, setting aside, or a legal avoidance. For a minor to disaffirm, he or she must declare in words or in oneself, a reason not to be destined in to an agreement of a contract. They must stop the whole agreement, not just a small part of it. Minors must return all of the products that they have, not just the ones they do not want. If there, is a third party (adult) involved and have some of the products, the minor can ask for it back to return it to where he or she bought it. Once a minor reaches, the age of maturity, the court will give them two months or in some states one year to disaffirm. If the minor refuses to disaffirm, the courts will ratified it. Ratification is the act of accepting and giving legal force to an obligation that previously was not enforceable. If an adult is in this court case, they will have to be bound to it and pay. In...
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...CHAPTER 1 LAW OF CONTRACTS 2 Business Law Including Company Law 1.1 NATURE OF CONTRACT [Sections 1–2] INTRODUCTION We enter into contracts day after day. Taking a seat in a bus amounts to entering into a contract. When you put a coin in the slot of a weighing machine, you have entered into a contract. You go to a restaurant and take snacks, you have entered into a contract. In such cases, we do not even realise that we are making a contract. In the case of people engaged in trade, commerce and industry, they carry on business by entering into contracts. The law relating to contracts is to be found in the Indian Contract Act, 1872. The law of contracts differs from other branches of law in a very important respect. It does not lay down so many precise rights and duties which the law will protect and enforce; it contains rather a number of limiting principles, subject to which the parties may create rights and duties for themselves, and the law will uphold those rights and duties. Thus, we can say that the parties to a contract, in a sense make the law for themselves. So long as they do not transgress some legal prohibition, they can frame any rules they like in regard to the subject matter of their contract and the law will give effect to their contract. WHAT IS A CONTRACT? Section 2(h) of the Indian Contract Act, 1872 defines a contract as an agreement enforceable by law. Section 2(e) defines agreement as “every promise and every set of promises forming...
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...capacity to contract on the part of Ben who is a minor? Whether Ben keep or return the items purchased to Wawasan Sports Shop? b) Law: Based on “Principles of the law of contract in Malaysia( 3rd ed)” written by Alsagoff, S.A. (2010), S.2 stated in the Age of Majority Act 1971 in Malaysia provide that the age of majority to enter to a contract is 18 years old, while the minor who is below 18 years old is incompetent to contract. All agreements are contracts if those agreements made in the condition of free consent by parties are competent to contract as stated in Contract Act 1950, S.10(1). Besides, the people who are competent to contract must be above 18 years old which mean age of majority, must be sound minded and must be not disqualified as stated in S.11 of Contract Act 1950. If the person is capable of understanding a contract and forming a rational judgment, the person is said to be sound mind as stated in S. 12. For example, a person who is mentally disable, drunk, suffering of sick and so on is unsound minded. According to "Principles of Business and Corporate law, Malaysia" written by Krishnan, L., Rajoo, P., & Vergis, A.C., (2009), S.37 and S.40 of the Specific Relief Act 1950, the court has discretion to order compensation to the other which justice may require. In the case Tan Hee Juan v The Boon Keat (1934), an infant who was executed transfers of land which it were witnessed and registered. The court held the transfer of an infant is void. Besides...
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...Minors' Capacity To Contract One of the elements constituting a valid contract is that the parties entering the contract are those who have the competency to contract. This is based on section 10 (1) of the Contract Act 1950 which states: “All agreements are contracted if they are made by the free consent of parties competent to contact, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.” Competency refers to the capacity of being an adult, having a sound mind and not forbidden by law to enter any contract (e.g, bankruptcy). This principle is based on section 11 of the Contract Act 1950 which provides that “every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject”. In Malaysia, the age of majority is recognized as above eighteen years of age as stated in the Age of Majority Act 1971: “The minority of all males and females at the age of eighteen years and every such male and female attaining that age shall be of the age of majority.” In effect of section 10 and 11 of contract Act 1950, the courts held in the cases of Mohori Bibee V Dharmodas Ghose (1903), Tan Hee Juan V Teh Boon Kiat (1934) and Government of Malaysia V Gurcharan Singh (1971) that all such agreements are void. Therefore, all contracts entered by a minor is generally void and a minor cannot sue...
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...valid contract A contract that complies with all the essentials of a contract and is binding and enforceable on all parties Definition of 'Void Contract' A formal agreement that is illegitimate and unenforceable from the moment it is created. A void contract could be considered void for a number of reasons. Common causes of a void contract are contract terms that are illegal or become illegal due to changes in law; one party to the contract lacks the capacity to enter into a contract because he is a minor or mentally incapacitated; and it is legal but declared null by the courts because it violates a fundamental principle. void contract Definition A contract that meets any of the following criteria: (1) it is illegal from the moment it is made; (2) it is legal but declared null by the courts because it violates a fundamental principle such as fairness, or is contrary to public policy; (3) it becomes void due to changes in law or in government policy; or (4) it has been fully performed. Lack of capacity to contract (such as arises from being an infant or minor, intoxicated, or insane) automatically makes a contract void. A contract that is void only in one or few parts may be saved by the process of severance. Not to be confused with voidable contract. Definition of 'Voidable Contract' A formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include failure by one or both parties to...
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...MAKE CONTRACTS The capacity of certain persons to conclude contracts is restricted by law. The law recognizes that certain people are either wholly or partly incapable to make a contract. The aim of this assignment is to explain and consider the critical legal matters the individuals and organisations have to consider when entering into a contract with these people. Contracts are part of everyday life and every business will need to make a contract and most businesses will have to make very many. Therefore it is necessary for an organisation as well as for individuals to understand that a contract is a legally binding agreement. In order for a contract to be legally enforceable the law demands agreement, consideration and intention to create legal relations (Maclntyre, 2008). It is generally believed that every person can make a binding contract as they wish (Maclntyre, 2008). But because the contract is a legally binding agreement, the law recognises some specific groups who either have not reached the maturity or do not have the capacity to fully understand the nature and extend of agreements that they make with others. Therefore it is important for every organisation and individual to understand that a number of persons have a restricted capacity to contract. These are minors, persons of unsound mind, drunks and corporations (Owens, 2001). All others can make a binding contract as they please. Beale, Bishop and Furmston (2008) argue that the law of minors` contracts...
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...case is about the government of Malaysia as the plaintiff whom had sued Gurcharan Singh the first defendant whom is a promisor of a contract and ORS as the second and third defendant whom act as the sureties of the contract for breaching the contract made between them. The contract is about the government of Malaysia providing the first defendant a scholarship for his study at Malayan Teacher’s Training Institution with an agreement that the first defendant will serve the government in consideration for being trained as a teacher. The duration of the contract is 5 years while the first defendant only served the government for 3 years 10 months only. However during the time the contract was made, the first defendant was in a minor state. The claim for the compensation for this case is $11,500. ISSUES There are three issues evolved in this case, these are: 1) Whether the contract made between them is a valid contract? 2) Whether the first defendant is liable on the claim for necessaries? 3) Whether the amount claimed or payable for compensation is reasonable and accepted regarding the case? DECISIONS The contract entered into by the first defendant was a void contract as he was an infant at the relevant time. Thus the principal debtor was not held liable and consequently the second and third defendants whom were the sureties of the contract also were not held liable. However, due to the exception on necessaries claim, the first defendant was therefore liable for the repayment...
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...13 MBA 16 – Business Law & Practice Module 01 - Law of Contract Coverage of: • Law of Contract: Definition, Essentials • Types of Contracts • Offer – Definition & Essentials • Acceptance - Definition & Essentials • Consideration – Definition & Essentials, Exceptions • Capacity of Parties • Free Consent • Quasi Contract • Legality of Object • Performance of Contract – Termination of Contract – Remedies for Breach of Contract Case Studies 1 The Indian Contract Act, 1872 The Indian Contract Act consists of the following two parts: General principals of the Law of Contracts – covered under section 1 to 75; the principles apply to all kinds of contracts irrespective of their nature Special kinds of contracts – covered under section 124 to 138 ; These special contracts are Indemnity & Guarantee (u/s124 to 147), Bailment & Pledge (u/s148 to 181) and Agency (u/s 182 to 238) in Chapter X – refer next Module 2) Section 76 to 123 – repealed by Sale of Goods Act, 1930 (refer Module 4) • • Section 239 to 266 – Chapter XI has been repealed by the Indian Partnership Act , 1932 ( not being covered separately; but major issues under different modules) The act does not affect any usage or custom of trade (u/s 1) – these prevail if reasonable & not illegal; an unique feature of this Act – most important branch of business law Some of the contracts not dealt with by the this Act are those related to Partnership, Sale of Goods (refer module 4), Negotiable...
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...INDIAN CONTRACT ACT, 1872 The Law of Contract Constitutes the most important branch of mercantile or commercial law. It affects everybody, more so, trade, commerce anq industry. It may be said that the contract is the foundation of the civilized world. The law relating to contract is governed by the Indian Contract Act, 1872 (Act No. IX of 1872). The preamble to the Act says that it is an Act "to define and amend certain parts of the law relating to contract". It extends to the whole of India except the State of Jammu and Kashmir. The Act mostly deals with the general principles and rules governing contracts. The Act is divisible into two parts. The first part (Section 1-75) deals with the general principles of the law of contract, and therefore applies to all contracts irrespective of their nature. The second part (Sections 124-238) deals with certain special kinds of contracts, e.g., Indemnity and guarantee, bailment, pledge, and agency. The term contract has been defined by various authors In the following manner: "A contract is an agreement creating and defining obligations between the parties". -Salmond "A contract is an agreement enforceable at law, made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others". -Anson "Every agreement and promise enforceable at law is a contract". -Sir Fredrick Pollock The Indian Contract Act has defined contract in Section...
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...Audi R8, worth RM 900,000. The car has now been delivered but she is unable to pay for it. Discuss. First of all, the Law of Contract has been defined as an agreement which is legally binding between the both of parties. A contract simply means an agreement between the parties however the agreement has some important element within as it alone does not stand to have a binding contract. In a contract, there should have all the elements as proposed which will be offer, acceptance of offer, consideration, intentions to create legal relations, capacity, consent, legality and possibility of performance. In this particular situation, the element of capacity is lacking in this contract. Capacity to a contract defines us that parties in a contract must have the capacity to make a contract. In a simpler way, capacity is referred as legal ability to enter into a contract and the law generally states that everyone has the capacity to a contract except for certain circumstances which will be discussed in the following paragraph. Phing is 17 and underage, which makes her legally ‘incapable of capacity’ due to her minor status, and therefore any contracts made by Phing would be void ab initio except for certain exceptions, such as contracts for necessaries, scholarship contracts and insurance contracts. Section 11 of the Contracts Act 1950 is about contracts entered into by those who have no capacity. This section states that a person must satisfy the age of majority according to the...
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