CONTRACT ANALYSIS

By – Krishna Dhanjani
WHAT IS CONTRACT ?

A contract is a formal agreement between people or

organizations that sets out the terms and conditions of their
relationship. It typically includes details about what each party is
responsible for, the duration of the agreement, and any
consequences for not fulfilling the agreed-upon terms.
Contracts are important because they help ensure that all
parties involved understand their rights and obligations.
Contract = Legally enforceable Agreement
EXPOSITION OF CONTRACT ACT

The Contract Act, also known as the Indian Contract Act, 1872, is
a comprehensive legislation that governs contracts in India. It
lays down the legal framework for the formation, performance,
and enforcement of contracts between individuals, businesses,
and organizations.

The Act defines the essential elements of a valid contract, which

include an offer, acceptance, consideration, capacity, and free
consent. These elements ensure that the agreement is legally
binding and enforceable. The Act also provides rules for
interpreting contracts and determining their validity.

Under the Contract Act, contracts can be bilateral (where both

parties have obligations) or unilateral (where one party makes a
promise). It covers various types of contracts such as sale, lease,
agency, partnership, and more. The Act also addresses the
consequences of breach of contract and provides remedies for
the aggrieved party.
One important aspect of the Contract Act is the principle of
freedom of contract, which allows parties to negotiate and
agree on the terms and conditions that suit their specific needs.
However, the Act also imposes certain limitations on the
freedom of contract to protect the interests of parties who may
be in a weaker position.

Overall, the Contract Act plays a crucial role in ensuring fairness,

transparency, and predictability in contractual relationships. It
provides a legal framework that helps parties understand their
rights and obligations, resolves disputes, and promotes trust
and confidence in business and personal transactions.
ESSENTAILS OF CONTRACT

A ) OFFER :
All contracts start with desire and responsibility. Someone
wants (desires) something, and someone can fulfill (take
responsibility for) that want. Known as “the offer,” this first
essential element encompasses the duties and responsibilities
of each party, but must also demonstrate an exchange of value.
That value can be money, or it can relate to a desired action or
outcome.
Technically, an offer does not exist until it is received by the
requesting party (the offeree). After the offer has been
received, it can still be revoked, altered, or terminated at any
time before acceptance.

B ) ACCEPTANCE :
Once the offer is presented, the offeree can decide whether to
accept or reject the proposal. The offeree can communicate
acceptance either verbally or in writing (including mail or
email)*.
Acceptance can take many forms, including:
* Conditional Acceptance
* Acceptance by Action
* Option Agreement
In general, a counter-offer is considered a termination of the
original offer, but some circumstances allow for conditional
acceptance. For example, the Uniform Commercial Code (UCC)
acknowledges the validity of new conditions to an offer, as long
as those conditions are made known to both parties and do not
cause surprise or hardship.

C ) CONSIDERATION :
In contract law, consideration is something of value that is
exchanged between the parties to a contract. Consideration is
essential for a contract to be valid and enforceable, which is
why it’s one of the key elements of a contract. There are two
types of consideration: * Executed consideration: Executed
consideration is something that has already been performed.

D ) CAPACITY :
In simplest terms, an individual cannot sign away their rights. Of
course, the reality is a bit more complicated, which is why
contract law requires that all signatories demonstrate that they
clearly understand the obligations, terms, and consequences of
the contract before they sign. The court defines that
understanding as “legal capacity,” and each party signing a
contract must demonstrate this legal capacity for the contract to
be valid.
E ) CERTANITY :
Another main element in a contract would be certainty. The
terms and regulations being made in a contract should be stated
clearly and understood by the parties of the contract. If the
agreement is not certain, it would be no longer valid.

F ) LEGALITY :
Finally, legality is one of the elements of a contract. All contracts
are subject to the laws of the jurisdiction in which they operate,
including any applicable federal, state, and local laws and
ordinances. Obviously, a contract for an illegal action or product
cannot be enforced. Even if the parties initially had no
knowledge, if their agreement runs afoul of local laws, that lack
of awareness is insufficient to overcome the legality burden. It
also goes without saying that a contract that involves criminal
activity is not valid. As always, there are nuances. In general, the
contract must adhere to the law in the jurisdiction where it’s
signed. Sometimes state and federal laws are not in alignment,
and in those cases, the Contract Clause (Article I, Section 10,
Clause 1 of the United States Constitution) will be the guiding
authority.
CONTRACT – 1
INSURANCE CONTRACT
TYPES OF CONTRACT :

Insurance contracts are unilateral, meaning that only the insurer

makes legally enforceable promises in the contract. The insured
is not required to pay the premiums, but the insurer is required
to pay the benefits under the contract if the insured has paid
the premiums and met certain other basic provisions.
PARTIES INVOLVED
• First Party - First Party Is The Car Owner Who Has
Purchased A Car Insurance Policy. (MR. HUANG AH CHAI )
• Second Party - The Insurer/Insurance Company Which Has
Promised To Indemnify The Policyholder For Financial
Damages/Losses Incurred By The First Party Due To An Event
Involving The Insured's Car. (UNION Insurance Company Ltd.)
• INSURER- UNION INSURANCE CO.LTD.
• INSUREE- MR. HUANG AH CHAI
PROMISOR/PROMISEE
• A contract of indemnity has two parties. The promisor or
indemnifier: He is the person who promises to bear the loss. The
promise or the indemnified or indemnity- holder: He is the
person whose loss is covered or who are compensated.
• PROMISOR- UNION INSURANCE CO. LTD.
• PROMISEE- MR. HUANG AH CHAI

CONSIDERATION
The special word “consideration” in contract law refers to
something that has value in the eyes of the law. Consideration:
is an essential element to make a contract must be provided for
a contract to be legally binding.
For insurers, consideration also refers to the money paid out to
you should you file an insurance claim. This means that each
party to the contract must provide some value to the
relationship.

ESSENTIALS OF CONTRACT
• Offer – Co. Offered Insurance
• Acceptance- Mr. HUANG AH CHAI Accepted The Offer To
Receive The Insurance.
• Consent- Free Consent Of Both Parties.
• Capacity Of Parties- Both The Parties Are Liable To Pay
The Premium And Insurance Claim.
• Lawful Consideration- Both The Parties Have Consideration
Legal In The Eye Of Law Which Is Paying The Premium By Insure
And Paying The Claimed Amount By The Insurer.
• Contract Not Declared Void- Being Legal Contract And Fulfilling
Essential Of Contract, The Contract Has Not Been Declared Void.

SUMMARY
The car insurance is unilateral contract. The parties involved
were two.
There was clear acceptance of the offer by the both parties.
The contract made was out of free consent.
Both the parties were in capacity to fulfill their promises.
The consideration between the parties was lawful. Moreover
the contract has not been declared void.
CONTRACT – 2
RENTAL CONTRACT
TYPE OF CONTRACT
• A lease agreement or rental agreement is a contract that is
signed between the landlord and the tenant. In the rental
agreement, the landlord gives the tenant the permission to
reside in his residential premises. This is a short-term contract.
This agreement will expire after 11-months
PARTIES INVOLVED
• There are two parties –
• lease: the user (MR. MURIKENCHERY SUDHIR )
• lessor : owner (MR. FARHAN AHMED )
PROMISOR/PROMISEE
• A contract of indemnity has two parties. The promisor or
indemnifier: He is the person who promises to bear the loss. The
promise or the indemnified or indemnity- holder: He is the
person whose loss is covered or who are compensated.
• PROMISOR- MR. FARHAN AHMED
• PROMISEE- (MR. MURIKENCHERY SUDHIR )

CONSIDERATION
The special word “consideration” in contract law refers to
something that has value in the eyes of the law. Consideration:
is an essential element to make a contract must be provided for
a contract to be legally binding.
IN THIS CONTRACT THE LESSOR’S CONSIDERATION IS TO
RECEIVE THE RENTAL AMOUNT WHEREAS THE LESSEE RECEIVES
THE FLAT AND SERVICES .

ESSENTIALS OF CONTRACT
• Offer- Mr. FARHAN AHMED Made Offer To Provide Flat
To Lessees.
• Acceptance- Mr MURIKENCHERY SUDHIR Received The Offer
Goven By The Lessor
• Free Concent- The Contact Was Made Out Of Free Concent Of
Both The Parties.
• Capacity Of Both Parties- Both The Parties Were In Capacity To
Fulfill Their Promises.
• Lawful Consideration- The Consideration Made Between The
Parties Was Lawfull.
• Contract Not Declared Void- The Contract Has Not Been
Declared Void.

SUMMARY
The Contract Made Between The Parties Is Legal Contract.
The Contract Was Made Out Free Consent . The Stamp Duty
Paid Was Rs. 100.
As Per Article 30 Lease Of Immovable Property The Contract
Was Made.
The Tenancy Os For 11 Months Commencing From 02-01-2021.
The Lessee Have Paid Rs. 1,00,000 As Security Deposit To The
Lessor.
As Per The Contract The Rent Will Be Increased By 5% Once In
Every 1 Months.
The Contract Has Not Been Declared Void.