In this article you will learn about “Contract law” and “Content of Contract”. Contract law topic is very important in exam point of view because there is a lot of chance to come 4 to 5 questions form Contract law topic.
Element of a valid Contract
- Agreement: offer and acceptance, can be written or oral.
- Expect or intension to create legal relation
- Capacity: Legal power
General rules: These contract can be done or conducted by the parties, they can be in form of written or oral, these are also called “simple contract”
Exception: some contract should be in written form such as company’s share transfer and property papers.
Specialty Contract: These contracts are in written form, properly signed have witnessed such as leases. They might be for 6 or 12 years.
Subject to contract: It refers to agreed term means until the contract is not completed you can not do any case or complain.
What is an Offer in Contract law
An Offer means specified term without any negotiations and which can not be changed, and if anything change then this is not an offer that is an invitation to treat.
It can be in form of oral and written but not effective until communicate to a person whom offer is giving.
Termination of an Offer
Terminated offer can not be accepted, offer can be terminated by:
Revocation: It means whether a person is interested in your offer but he still did not accept that offer.
Rejection: not accept an offer for example: x want to sell his car at $5000, One of the buyer Y said that he will buy but he will pay only $4000. In other words not accepted by both parties.
Lapse: Crossing the time limit it may be happened because of death of offeror or offeree, failure to meet the condition or after the expiry or specified time.
Tenders in Contract law
Advertise to sell something but it is not an offer but yeah It is an invitation to treat, you may sell or not and that is decided by the hammer.
Example: you have a painting which is wonder itself and people are crazy to buy that painting. You set a program for selling that painting and call the people who wanted to buy, you keep $1000 minimum price of that painting. One of buyer calls for $1500, second one calls for $2000, there was one of the big fan of your that painting and he calls for $5000 to buy the painting and your hammer falls and now you have to sell and then this will be called an offer.
Consideration in Contract law
Consideration means some exchange that might be somethings related to products and it may be in monetary form. We can say that consideration is the promise to the party on any contract.
The basic rule is in every simple contract their must be consideration from each party which supports the contract.
Executory Consideration: the promise of paying in the future example cash on delivery.
Executed Consideration: When the contract is made in the same time consideration has to pay.
Sufficient Consideration: There must be suitable or supported amount, sufficient but not adequate.
Past Consideration: The promise that is made after the work or contract completed.
For Example, If a friend pay for a movie ticket without informing to his friend then his friend said and made a promise that he will pay that amount.
Note: Performance of an existing statutory duty is not sufficient consideration or consideration. And an illegal act is an insufficient consideration or amount to consideration.
The promissory estoppel is based on rules and principles of fairness and justice. it prevents someone to go back to his promise to accept a small and lesser amount.
Privity of Contract law
Only the parties to a contract can acquire rights and obligations under it.
If person A contract with person B then they can only case on each other. But if a third party is involved in the contract whether it take benefits or not from that contract, it will be involved because the name and the description of third party is mentioned in the contract.
Collateral contract: A collateral contract one in which the participants to one deal sign or pledge to sign additional contract. As a result, the two contracts are linked, and although though it is not a constructive component of the initial contract, it can be executed.
Example if you take loan from bank then you have to give or keep something to bank this is because in the event that you will not able to pay loan on time then bank can sell that property or anything which you keep to bank for as consideration.
Express Contact: A contract made through words in written form or can also be in oral at time of contract formation.
Implied Contract: Contract made silently for example: you go to a shop and take a soap without shopkeeper’s permission and paid him and return back. In this whole process you even not talk a single word to shopkeeper or nor he talks.
An agreement or contract in which one party promises to pay a certain amount in exchange for a specific action, such as an agreement to pay a compensation for the returning of an item or items. Since a contract is made when the item or the items is returned, acceptance does not have to be communicated in these circumstances.
Big businesses or firms create a document that lays forth the terms on which their consumers will do trade with them. There is no room for bargaining; the customer must either accept or reject the terms. In the other alternatives, there is room for discussion in the contracts.
Renunciation in Contract law
One side declares that they will not carry out their commitments. When one party declines to execute the work. When one party expresses an intention not to perform, or specifically announces that they will not be able to fully perform their responsibilities under the contract in some key regard, this is known as renunciation. The renunciation can happen before or during the act.
Breach of Contract
Whenever one party to a legal agreement fails to fulfil as per the current or original agreement or obligations, it is called a “breach of contract”.
If party A contract with party B on supplying of goods on specified date but can not fulfil the order then this is said be “Breach of Contract” in contract law.
Repudiatory Breach of Contract
In this case, the innocent victim or party may confirm the deal and proceed to fulfil their responsibilities. If they plan to break the contract, they must notify the other party. They can sue for damages or declare the deal null and void. They have the authority to decline to pay for work that has already been completed in part or in a poor manner.
Expect or intension to create legal relation
If the parties wants to do contract then they must be entered into a legal relationship. If the intension are not cleared then can also understand according to agreement and types of agreement.
Note: If there is no intension to legally bound, this is known as “domestic or social agreement” and if there is intension to legally bound this is said to be “Commercial Agreement“.
Contracts which does not have any provision for damages, the court may help in determining the payable damages these are classified as unliquidated damages.
These factors are consider when determining the Unliquidated damage amount.
- What or which loss can be claimed
- Amount of loss
Remoteness of losses: These loss can not be recovered and these are referred as “too remote” means deep loss.
Measure of damages: How much (loss) can be measured in monetary terms or in amount. This is sometimes described as “damages for loss of bargain“.
A contractual work which has already been done or performed can be measured.
There is a party A and party B they both contracted with each other. A has done it’s work but B refuse to pay now A has right to claim his amount.
These are depends on court decision.
|Specific performance||Requires to perform his work or obligations|
|Injunction||Order someone to do something or not to do, it may impact negatively on contract|
|Rescission||Back to the start position|
Parliament Act Stages
- First reading
- Second reading, Committee stage and Report stage
- Third reading
Parliament Act Stage is very important in “Contract Law” chapter and it is usually examines in the the exam.
Obiter Dicta: It is an opinion or judgement which is really not necessary in the case.
Exclusion Clause in Contract Law
It prevent the right and liability for the innocent party, means if contract breached then the party is not liable for paying liability if there is breach of rules, laws and contract.
Anticipatory, Actual And Fundamental Breach In Contract Law
Anticipatory Breach: A party refuse to fill the obligations before on due date or in advance.
Actual Breach: A party refuse to fill the obligations on due date.
Fundamental Breach: This breach is occurred on the conditions such as failing to give expected service.
|Quantum Meruit||Claim for reasonable amount or damage|
|Action of Price||Pay according to contract|
|Restitution||Order from court for recovery of the loss|
|Pure Economic Lose||It is a financial loss but can not be seen physically but can be seen in statement of financial position|
|Contributory Negligence||When a person to fail for care in doing something, he responsible for his own injury and will contribute itself for the loss|
Hopefully you like this article and cleared the basic understanding of the “Contract law” topic.
Read Corporate and business law notes