Law (Act) Making Proce Ss

Law (Act) Making Proce
ss
Law (Act) Making
Process
On the basis of validity
1. Valid Contract
An agreement enforceable by law when all the
essential features of a valid contract are present.
2. Voidable Contract
A contract becomes voidable when the consent is not
free.
Usually a contract becomes voidable when the consent of
one of the parties to the contract is not free.
Eg- A, threatens to shoot B if he does not sell his bike to
A. B agrees. This contract is voidable at the option of B
3. Void Contract
A void contract is the contract that has no legal effect at
all.
A contract which ceases to be enforceable by law
becomes void, when it ceases to be enforceable by
law.
On the basis of formation
1. Express Contract
Contracts formed with the words spoken or written, is
an express contract.
Eg- A tells B on phone that he wants to buy his car for

Rs 80,000 and B accepts the offer on phone, this is an
express contract.
2. Implied Contract
When the offer and acceptance is made by acts or
conducts of the parties, it is an implied contract.
For eg- A, a coolie in uniform takes up the luggage of B

at Railway Station and B allows him to do so, then the
law implies that B will have to pay for the services of A.
This is an implied contract.
3. Quasi-Contract
Quasi-contract doesnt arise by virtue of any agreement,
but the law infers or recognises these contracts under
special circumstances.
For eg- Claims for necessaries supplied to an incapable

person.
2. Responsibilities of finder of goods.
On the basis of execution
1. Executed Contract
A contract is said to be executed contract when both
the parties to a contract have performed their
obligations.
For eg- When a bookseller sells a book on cash payment,

it is an executed contract because both the parties have
done what they were to do in a contract.
2. EXECUTORY CONTRACT
When either both the parties to a contract have still to
perform their share of obligation, then it is executory
contract.
For eg- A buys a car from B for Rs 100,000. Now, A has

made the payment but B has not transferred the
contract, it is an executory contract as the parties have
to meet the obligation.
ESSENTIAL OF A VALID
CONTRACT
AGREEMENT
Every promise and every set of promises, forming the
consideration for each other, is an agreement. {Section
2(e)}
A person makes a proposal (Offer). When it is accepted
by other, it becomes a promise (Acceptance). Thus,
Offer + Acceptance = Promise
Only a mutual promise forming consideration for each
other is agreement. Thus, Promise + Consideration
= Agreement
11
CONTRACT
= AGREEMENT +
ENFORCEABILITY
An agreement enforceable by law is Contract. -
Section 2(h)
There must be legal relationship.
Agreements of social or domestic nature are not contracts.
Examples:
Invitation to a Birthday party
Invitation to a Dinner etc
12
ESSENTIAL OF A VALID
CONTRACT
13
ESSENTIAL OF A VALID CONTRACT
1. Proper offer and its acceptance
2. Lawful object
3. Agreement not expressly declared void
4. Intention to create legal relationship.
5. Free Consent
6. Capacity of parties to contract
7. Certainty of meaning.
8. Possibility of performance.
9. Lawful consideration
10.Legal formalities
August 21, 2009 Copyright Dipak Parmar 14

OFFER AND ACCEPTANCE
In order to create a valid contract, there must be a 'lawful

offer' by one party and 'lawful acceptance' of the same
by the other party.

Intention to Create Legal Relations
Agreements which create legal relations or are capable
of creating legal relations are contracts, for example, an
invitation to a dinner does not create any legal relation
and therefore is not a contract.
Husband & Wife Agreements

The courts consider domestic arrangements between
husband and wife to be social agreements and not
legally enforceable: Balfour v Balfour.
CONSIDERATION =SOMETHING IN
RETURN
When, at the desire of the promisor, the promisee or

any other person
has done or abstained from doing (PAST), or
does or abstains from doing (PRESENT), or
promises to do or to abstain from doing, something (FUTURE),
such act or abstinence or promise is called a
consideration for the promise. -Section 2 (d)
A promise without consideration is not agreement
17
CAPACITY OF PARTIES
The parties to an agreement must be
competent to contract. If either of the
parties does not have the capacity to
contract, the contract is not valid.
According the following persons are
incompetent to contract.
(a) Minors,
(b) Persons of unsound mind, and
(c) persons disqualified by law to
which they are subject.
FREE CONSENT
Two or more persons are said to

consent when they agree upon the
same thing in the same sense.
(Section 13)
19
FREE CONSENT
Consent of both parties must be free.
Consent is said to be free when it is not
caused by
(1) coercion, as defined in section 15
(2) undue influence, as defined in section
16
(3) fraud, as defined in section 17
(4) misrepresentation, as defined in section
18
(5) mistake, subject to the provisions
20 of
LAWFUL OBJECT
The object for which the contract has been entered into
must not be fraudulent or illegal or immoral or opposed
to public policies.

POSSIBILITY OF PERFORMANCE.
If the act is impossible in itself,
physically or legally, if cannot be
enforced at law. For example, Mr. A
agrees with B to discover treasure by
magic. Such Agreements is not
enforceable.

Certainty of Terms
The terms of a contract should be

clear. In other words, the contract
must not be vague. Contracts which
are vague cannot be enforced.
AGREEMENTS NOT DECLARED
EXPRESSLY VOID
There are Certain agreements which

have been expressly declared void
by the law. Thus an agreement made
by parties should not fall in this
category.

Legal Formalities
Oral contract is a valid contact. However the contract

must be in writing and registered, if so required by any
law, for example, gift, mortgage, sale, lease under the
Transfer of Property Act 1882, Memorandum and
Articles of Association of a Company under the Indian
Companies Act

Legal rules regarding valid
offer
An offer may be express or implied
It should give rise to legal consequences and be capable of
creating legal relations
The term of the offer must be certain
An offer can be made subject to any terms and conditions.
It should be made with a intent to obtain the assent of the other
party
An offer should not contain a term the non compliance of which
would amount to acceptance
Two identical cross offers do not make a contract.
An invitation of offer is not an offer
Shweta Verma, Research Scholar 26

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Law (Act) Making Proce

Eg- A tells B on phone that he wants to buy his car for

For eg- A, a coolie in uniform takes up the luggage of B

For eg- Claims for necessaries supplied to an incapable

For eg- When a bookseller sells a book on cash payment,

For eg- A buys a car from B for Rs 100,000. Now, A has

August 21, 2009 Copyright Dipak Parmar 14

In order to create a valid contract, there must be a 'lawful

August 21, 2009 Copyright Dipak Parmar 15

Husband & Wife Agreements

When, at the desire of the promisor, the promisee or

Two or more persons are said to

August 21, 2009 Copyright Dipak Parmar 21

August 21, 2009 Copyright Dipak Parmar 22

The terms of a contract should be

There are Certain agreements which

August 21, 2009 Copyright Dipak Parmar 24

Oral contract is a valid contact. However the contract

August 21, 2009 Copyright Dipak Parmar 25

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