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Law of Contract

In: Business and Management

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Law of Contract

The nature of contract law:
The law relating to contracts is a subject matter of private law. The governing law of contracts is the Contract Act 1872, which is predominantly a private law. The public law, however, comes into play when the parties are at breach of contracts. For example, the courts can award damages/compensation for the breach of contract, which is an act of public law.

Contract law is part of law of obligation, which has other sources such as law of torts which govern compensatory remedies for legal injuries arising out of breach of legal, not contractual, duties. An example of tort law is compensation for injury arising from the use of a faulty product, not based on a contract.

Contract permeates every day business life. Business managers often need to enter into, and sometimes even draft, contracts with other enterprises or people. Sometimes, contracts give rise to disputes which need to be settled through courts or arbitration. A well-drafted contract however can minimize the rise of disputes, which in many ways depends upon the legal adviser’s or the manager’s knowledge about contract law.

The contract law deals also with the laws of agency, partnership, and the sale of goods. Of these issues of contract law, contract law proper and the law of agency re governed by the Contract Act 1872, a British-era enactment.

Definition of a contract:
According to s. 2 (h) of the CA 1872 an agreement enforceable by law is a contract. Te relevant next question is, therefore, which agreements are enforceable by law? An agreement that fulfills the legal requirement is enforceable at law. An agreement is simply meeting of two minds to do or not to do something, which may or may not be legally enforceable. Then, what are the legal essentials that must be there in an agreement that is enforceable as a contract?. There are several...

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