business regulatory framework

 

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business regulatory framework

 

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Indian Contract Act 1872

 

came into force From 1 September, 1872

 

Lays down the principles which have to be followed to create contract 

 

Contains a few types of special contracts like indemnity, guarantee, bailment, agency etc 

 

Elements of a valid contract (Sec 10)

 
1.Proper offer and acceptance. 

 

2. Parties must be competent : They must have the legal capacity to create a contract 

 

Capacity of parties (Sec 11) : 

• Age of majority 

(Sec.3 of The Indian Majority Act, 1875) 

An agreement with or by a minor is void

 

• Sound mind

( unsound mind: idiocy, lunacy, drunkenness)

 

• Not disqualified from contracting by any law 

(alien enemies, insolvent, foreign sovereigns and ambassadors, corporations, convicts) 

 

3. Parties must give Free consent (sec 13): 

agree upon the same thing in the same sense 

 

Free Consent 

 

Consent can be said to be free when it is not caused by (Sec 14):

i.Coercion
ii.Undue influence
iii.Misrepresentation
iv.Fraud

v.Mistake 

 

4. There must be legal relationship between the parties 

 

5. There must be lawful consideration 

 

6. Objective of contract must be lawful 

 

7. Must comply legal formalities 

 

 

Discharge of a contract – 

 

termination of the contractual relationship between the parties. 

 

Modes:
 

a.By performance
 

b.By agreement 

• Novation : substituting by a new contract 

• Rescission: cancel by mutual consent 

• Alteration : alteration of terms etc.

 

c. By impossibility 

(doctrine of supervening impossibility, post – contractual impossibility ) 

 

d. By laps of time 

 (The Limitation Act- 1963 ) e. By operation of law (By death, insolvency, unauthorized alteration)

 

f. Discharge by Breach of Contract - 

breaking of the contractual obligation by a party to the contract without lawful excuse. 

 

• Actual breach of contract (due or performance) 

• Anticipatory breach of contract ( Renounces the obligation before the fixed time) 

  

 

Remedies for Breach of Contract 

The affected party has many options available: 

 

• Rescission of the contract 

• Suit for Damages. (monitory compensation) 

• Suit for injunction 

• Suit upon quantum (quantum meruit – as much as earned)

 

Quasi – Contracts 

 

A contract that exists by order of a court, not by agreement of the parties 

 

It s based on the principle of equity

 

 

Contract of Indemnity (sec 124) -

 

A contract to compensate or make good the loss. 

Indemnifier  - indemnified. 

 

 

Contract of Guarantee (Sec 126) -

 

 Tripartite agreement 

 

Creditor - debtor - surety 

 

 

Contract of Bailment (Sec 148) – 

 

Bailor - Bailee (Finder of goods)

 

 

Pledge (sec 172) - 

 

Delivery of good as a security 

pledgor or pawner - pledgee or pawnee 

 

 

Law of agency – 

 

principal - agent 

 

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