INTRODUCTION TO LAW:
Sir John Salmond defines law as
"The Body Of Principles Recognized And Applied By The State In The Administration Of
Justice"
It is the combination of rules and regulation under which the organization and individuals
perform functions. The basic motive of law is to maintain the relations. When the theories and
practices come together it makes law.
LAW = THEORY + PRACTICE
CONTRACT:
CONTRACT [SECTION 2(h)]: A contract is “an agreement enforceable by law”. So,
CONTRACT = AGREEMENT (+) ENFORCEABILITY BY LAW
“All contracts are agreements but all agreements are not contracts”
A contract is the legal relationship that consists of rights and duties of the contracting parties
growing out of promises. A contract intends to formalize an agreement between two or more
parties, in relation to a particular subject.
AGREEMENT:
Agreement [SECTION 2(e)]: An agreement means, “Every promise or every set of promises,
forming consideration for each other”.
AGREEMENT = PROMISE(S) BY ONE PARTY (+) PROMISE(S) BY THE OTHER PARTY
For Agreement consideration from the both sides should be legal, and the way of consideration
should also be lawful.
PROMISE:
PROMISE [SECTION 2(b)]: “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.”
Promise is the combination of offer and acceptance.
PROMISE = OFFER+ ACCEPTANCE
SOCIAL AGREEMENT:
1
Social agreement is that agreement which is not enforceable by law. Every agreement which
never involves any commercial activity is called social agreement. It is not enforceable by law
because it can be resolve easily and there are low chances of conflict.
LEGAL AGREEMENT:
Legal agreement is that agreement which is enforceable by law. Every agreement that involves
any commercial activity is called legal agreement. It is enforceable by law because it cannot be
resolved easily and there are most chances of conflict.
OFFER OR PROPOSAL:
PROPOSAL/OFFER [SECTION 2(a)]: A person is said to make a proposal when “he signifies to
another his willingness to do or to abstain from doing anything, with a view to obtaining the
assent of other to such act or abstinence.” Thus there may be “positive” or “negative” acts
which a proposer is willing to do.
In simple words it can be said that, offer is a statement which is given by one person to another
person with the intention to get the consent of that person.
From this definition, it is also concluded that a proposal is merely an offer to be bound by a
promise. It is a declaration by the offeror of his intention to be bound by an obligation if the
offeree fulfils or undertakes to fulfill certain conditions. If there is no acceptance, statement
does not become an offer, it remains an invitation to offer.
To be an effective offer, three requirements must be met: clear manifestation of intent, definite
terms and conditions, and communication of the offer.
MANIFESTATION OF INTENT:
In making the proposal, the offeror must have the intent to be bound to the contract, and that
intent must be clearly manifested or apparent. Preliminary negotiations are not an offer. For a
binding contract to result from an offer and acceptance “the minds of the parties must meet at
every point; nothing can be left open for future agreements.” An agreement to make a future
contract is not binding upon either party unless all terms and conditions are agreed upon and
nothing is left to future negotiations.
DEFINITE TERMS AND CONDITIONS:
The terms of the offer must be sufficiently detailed so that each party’s promises are reasonably
certain. An offer that has ambiguous or missing terms cannot serve as the basis for a contract.
COMMUNICATION OF THE OFFER:
An acceptance requires knowledge of the offer by the offeree. Accidental compliance with terms
of an unknown offer does not form a contract consistent with the terms of offer.
2
ACCEPTANCE:
Acceptance is the offeree’s expression of assent or agreement to the exact terms of the offer.
When the consent is given by another person, in response of an offer, it becomes acceptance.
To be effective, an acceptance must be unconditional and legally communicated.
CONSIDERATION:
Consideration is something of value or something bargained for in exchange of a promise. It is
the element of a contract that keeps it from being a gift. For any contract to be valid,
consideration is needed. Consideration is the benefit or detriment in the exchange process. If X
goes to the shop to buy a bag of rice and he takes it to the cashier. X pays the money for the bag
of rice. He loses his money but gains a bag of rice. The shop on the other hand looses the bag of
rice but gains the money.
As agreement is an exchange of two considerations by the parties. Both the considerations
should be legal and have some value in eyes of law. Not only the consideration should be lawful,
the way of transformation should also be lawful.
Courts generally do not like to inquire into the adequacy of consideration given in a contract.
