Beloved pupils. welcome to the talk series on Business Regulatory Frame Work. Today we are traveling to discourse the Indian Contract Act 1872. Before I start my treatment on the contract. I would wish to do you cognizant that the Indian Contract Act 1872 came enforced on the 1st twenty-four hours of the September 1872. It is applicable to whole of the state except the State Jammu & A ; Kashmir. The class related to the jurisprudence is designed to leave the cognition to the pupil so that they are acquaint with the general rules of the jurisprudence. As you know in our twenty-four hours to twenty-four hours life we come across figure of contracts but we are non cognizant about them. When we board a coach or when we go to see a film or we lend off book to our friend or when we are lodging the baggage in the railroad clock room. the jurisprudence comes in the image without understanding the jurisprudence we will non be able to understand what are the rights and the duty granted to the persons. The aim of this class is to supply a brief thought about the frame work of the Indian Business Law.
2. Agreement and Contract
Now we will get down our treatment on the Indian Contract Act. First of all we should understand what is a contract? Apart from the legal definition if we by and large understand the word Contract so we can state that a contract comes into the image when there is an understanding and when the understanding become enforceable it go a contract. There are two words Agreement and Contract. What is an understanding? Agreement itself comes in the image when there is an offer and credence. Now once more if we go into the inside informations of this offer and credence so we find that offer is an look of the desire by one party in forepart of the other party to make something or non to make something is an offer. Suppose ‘A’ says to the ‘B’ that I would wish to sell my auto to you in 50 thousand rupees. will you purchase? Now here ‘A’ is showing his desire to the ‘B’ to sell his auto so that ‘B’ buy’s it. So offer has to be at that place and in that offer if there is an credence so it becomes an understanding and suppose in the same illustration ‘B’ says that YES he would wish to Page 1 of 9 buy the auto of the ‘A’ so it becomes an understanding. Now when there is an offer and credence in a contract it becomes an understanding.
So after analyzing or analyzing how understanding comes into the image we move on to understand what is a contract? Now to make at the degree of the contract we have to add or we have to integrate enforceability into it. the jurisprudence says that until and unless an understanding is non enforceable. it can non go a contract and to do it enforceable we have to add to certain necessities of a valid contract which are explained in the Section-10 of the Indian Contract Act. 1872.
Without enforceability it will merely stay an understanding it can non go a contract. So in other words we can state to make at the degree of the contract we must hold on the one manus understanding and on the other manus we must hold enforceability into it and so it will make at the degree of the contract or it will go a contract. If I say all understandings are non contract but all contracts are understanding because all understanding can non make at the phase of the contract because if an understanding is non enforceable in malice of holding figure of the component of enforceability into it. If it is missing one component of enforceability. it can non make the phase of the contract.
Now merely to do it a really simple. If I say that you are the pupil of the B. Com Part-I and if I say that you will go a graduate one twenty-four hours. there is no certainty into it. A pupil in the portion 1 will decidedly be a alumnus there is no certainty because he may drop the surveies in between or he may make up one’s mind to discontinue but whomsoever is a alumnus or if a pupil is a B. Com so automatically I will state that he has completed B. Com. Part I. So a pupil who is B. Com Part I need non to be needfully be a graduate one twenty-four hours but whomsoever is a alumnus was decidedly was in B. Com Part I.
Meaning thereby. if I relate. B. Com Part 1. with an understanding and B. Com itself. with a contract. There is a spread between the two like an understanding has to be converted into the contract with enforceability. We had to add the indispensable elements in a contract and so it will go a contract. Similarly a pupil has to go through B. Com Part I. he has to go through B. Com Part II and so he has to go through B. Com Part III or the concluding twelvemonth scrutiny so he will go a alumnus. If someplace in between if he leaves the surveies or discontinue the surveies. he can non go a alumnus. So we can state all contracts are understanding but all understandings are non contract.
3. Definitions of Agreement and Contract
Now I would wish to give you the definition of the contract which have been defined in the jurisprudence. The term contract is defined in subdivision 2 ( H ) of the Indian Contract Act which reads as under:
“An Agreement enforceable by jurisprudence is a contract” .
Now if we analyse the definition we find that whatever I have explained to you earlier is covered in this definition and if we go by the definition of understanding given in the subdivision 2 ( vitamin E ) – “Every promise and every set of promises is organizing the consideration for each other is an understanding. ”
Now if we analyse this
definition and I have explained it earlier that understanding or the promise consist of two things offer and credence. Let us see the some definition given by the minds. Definition given by Mr. Polak “Every understanding and promise enforceable at jurisprudence is a contract” and Sir Salmond has defined “a contract is an understanding making and specifying duty between the parties. If we analyse the definition given by high legal expert and the definition given in the Indian Contract Act. we reach on this decision that to do an understanding enforceable and so we can come in into a contract. Now the inquiry arises that what are those things which can do an understanding enforceable in the oculus of jurisprudence. Since. we have studied the part of the understanding really good. that it is made up of two things offer and credence. Offer is the look of the desire by the one party in forepart of the other party to give an acquiescence and credence is the assent given on the offer. 4. Enforceability in an Agreement
Now we will travel on to the points which bring the enforceability in the understanding and if the enforceability is added it is included it will represent along with an understanding it will represent a contract. The first and foremost point which we had discussed is that there has to be an offer and at that place has to be an credence. As you know really good that without two parties or more than two parties we can non come in into a contract. So in a contract at that place has to be more than two parties and one party will do an offer to the other party. The other party will give an credence on it. This is the cardinal indispensable to change over or to convey the enforceability in understanding. The 2nd of import indispensable component is that there has to be a free consent between both the parties. Now this peculiar word free consent is made up of two words consent and it should be free.
As I mentioned that each component will be dealt by me subsequently on in great item therefore I am supplying you the brief debut of these elements. The consent is the meeting of the head and both the parties agree upon the same thing in a same sense it is said that there is a consent. But it will be free provided it is non caused by or provided the consent is non obtained by coherence. undue influence. fraud and deceit. In really simple line I will explicate coercion significance thereby if one party forcibly obliging the other party to come in into the contract it is said that coercion has been applied on the other party. For illustration A by endangering to kill him enters into a contract with him it is said that A has entered into a contract with the B by coercion.
Undue influence. whenever there is undue influence. one party is ever in a stronger place and other party is ever at a weaker place. The stronger party morally pressurised the weaker party to come in into the contract and weaker party enters into the contract without the free will. It is said the undue influence has been exercised. What is the fraud? The fraud means when one party deliberately or intentionally or with the purpose to rip off the other party. to lead on the other party. enters into the contract it is said that fraud has been exercised by the party and deceit significance thereby. a statement which is non true but the party doing it believe it to be true it is said that deceit have taken topographic point so if we have got the four component if the consent is called by these four component it is said that it is non a free consent and contract enter into by the party without free consent even non holding enforceability remember we are now covering with those point which will convey the enforceability with the understanding so that it go a contract.
We are here analyzing the point which will take the understanding to the contract. These points I am discoursing. once more I am reiterating in really really brief mode. The another point which is really of import to convey the enforceability is the parties should be competent to come in into the contract. Without traveling into the inside informations if we say all parties are competent to come in into the contract except the three parties. if we exclude these three parties from the understanding there will be enforceability so that understanding will go a contract and these parties are if the contract is enter into by the bush leagues and child is a individual who is non holding age of 18 if the contract has been enter into by the individual of unsound head it is said that it is non enforceable he is non competent to come in into the contract and if the people debar by jurisprudence if they enter into the contract since they do non hold capacity to come in into the contract it can non go a contract and they don’t have capacity to come in into the contract. Therefore if we say. if these three people are present in any understanding that understanding can non go a contract and except these three people if any individual enter into the contract that understanding will hold enforceability.
5. Lawful Object and Consideration
Now I move on to another point that is known as the object of the understanding should be lawful and the consideration which is given should besides be lawful. There are two things. object of the contract should be lawful every bit good as the consideration given to accomplish the object should besides be lawful. First of all I will take up what do we intend by consideration. Consideration the jurisprudence says is that something in exchange like if you go to the market to purchase 1 kilogram sugar you give 35 rupees to the tradesman and the tradesman gives you 1kg sugar.
For the tradesman. 35 rupees is a consideration and for you. sugar is a consideration. So there is an exchange between the two parties hence at that place has to be a consideration but the consideration should be lawful and object of the contract should besides be lawful. Now jurisprudence says what is lawful object? and what is lawful consideration? In the Law has non defined in a positive mode. jurisprudence have defined that what is improper. If the jurisprudence says if any object and consideration does non fall within these lines so it is automatically lawful object and lawful consideration.
Meaning thereby. we go negatively to explicate what is the lawful object? And what is the lawful consideration? Now suppose. ‘A’ says to the ‘B’ that if you will kill the ‘C’ I will give 50 thousand rupees. Now in this illustration when ‘A’ says to the ‘B’ to kill the ‘C’ . the object is non lawful every bit good as the consideration which is decided to kill the ‘C’ is besides non lawful. Therefore the object of the contract should be lawful but I will advert certain points which are declared by the jurisprudence that they are treated as improper therefore they are non applicable or they don’t have any cogency in the oculus of jurisprudence. Number one is If it is deceitful the object of the contract is to make some fraud so it will be treated as the object of the contract is non lawful. For illustration if ‘A’ . ‘B’ and ‘C’ together decide and rip off the ‘D’ they make a program to rip off ‘D’ or to play a fraud with the ‘D’ it is improper and object of the ‘A’ . ‘B’ and ‘C’ of the program is improper.
6. Objects Forbidden by Law
If the object of the contract is forbidden by jurisprudence. when we say it is forbidden by jurisprudence significance thereby the jurisprudence does non allow that if the object of the contract is forbidden by jurisprudence so it will non be treated as a point of enforceability in an understanding. For illustration if ‘A’ holding a life married married woman enters into a contract to get married another lady. Now here in this illustration the object of the contract is forbidden by jurisprudence and if we dwell upon we will happen that it is written in the Hindu jurisprudence that a individual if he is holding a married married woman populating with him can non get married the another lady. So if the object is forbidden by either by the jurisprudence or by the province statute law or by the Cardinal Government if they have enacted any jurisprudence and if it is out and if we try to enters into a contract which is forbidden by jurisprudence that will be treated as improper object.
The following point in the improper object and consideration is that if the object is permitted it will get the better of the commissariats of the some other jurisprudence and if we take the illustration we find that suppose in a company it is mentioned that a individual if he comes to go to a meeting he will be given 125 rupees for illustration as a wage to go to the meeting and 25 rupees as a allowance. Now if we are giving the allowance with an purpose to hedge the income revenue enhancement so it will be treated that object of giving the 25 rupees with an purpose of hedging the income revenue enhancement so we can state here besides the object of the contract is non lawful and if it is deleterious to the other party.
If two parties enter into the contract to wound person that object is besides improper and if the object of the contract is immoral. Now the definition of the morality will depend upon the criterion of the society but yet if we are advancing the harlotry. that is considered as to be an immoral and if the two parties enters into the contract which promotes the harlotry. that object of the contract is besides improper but last but non the least header in the improper object and consideration is that it should non be against the public policy. Now public policy is a really broad term. Public policy has been defined by different is ever a situational. high legal expert in different mode it
Whatever is suited harmonizing to the criterion of the society can be included in the header of the public policy. We sometime name it that public policy is boisterous Equus caballus. We can include any header in the public policy. Like. for illustration late the Supreme Court has given a opinion in which they have specifically mentioned that no building activity will take topographic point in Bombay and other parts of the state after 10 O’clock in the dark. Now this determination has been given in the involvement of the public policy. If you recall there is a opinion that during the Navratras the dandiyas are non allowed after 10 o’clock in certain provinces except Gujarat because the Gharba is the festival of the Gujarat. Dandiya is played during that peculiar period with the great enthusiasm in the Gujarat because it has got an beginning in the Gujarat. It originated from the Gujarat.
So except Gujarat the Dandiyas will non be played in other portion of the state after 10 o’clock. This determination is given in the involvement of the public policy. So public policy is a really broad term. Yet we have decided certain caputs which are included in the public policy. First is merchandising with enemy. 2nd is trafficking in the public offices. 3rd is intervention with disposal of justness. 4th is marriage securities firm contracts. fifth is understanding be givening to make involvement oppose to responsibility. 6th understanding in restrain of parental right. 7th understanding curtailing personal autonomy and the last but non the least is the understanding to perpetrate a offense. So the object of the contract should be lawful and in this point we had studied that what is lawful and it has non been explained but what is improper it has been explained.
7. Agreement should non be Declared Void
Now we move on to another component which bring the enforceability in an understanding.
The header of that component is that an understanding should non be specifically declared nothingness. In the jurisprudence of contract there are certain understandings which are declared by jurisprudence that they are the nothingness and they can non be at any rate be converted into the contract and as we know null understandings are the nothingness from the really get downing. They can non be converted into the contract. they are non enforceable they have no value in the eyes of jurisprudence. Now for your convenience I will advert the headers of the null understandings. The first and the foremost is understandings by individual who are non competent to contract ( Section-11 ) . understanding under a common error of fact stuff to understanding ( Section-20 ) . understanding with improper consideration or object ( Section-23 ) . understanding. the consideration or object of which is improper in portion ( Section-24 ) . understandings without consideration ( Section-25 ) . understanding in restrain of matrimony ( Section-26 ) . understandings in restraint of trade ( Section-27 ) . understandings in restrain of legal proceedings ( Section-28 ) . understanding. the significance of which is unsure ( Section29 ) . beting understanding ( Section-30 ) and understanding to make impossible act ( Section-56 ) . If we look at the list we find that any understanding which is falling under these classs or under any of these classs will be known as the nothingness understanding it can non be converted into the contract.
If I move on to another
component of the enforceability and that is the understanding must be certain. When we say the understanding must be certain intending thereby when offer is made to another party it should hold the component of certainty. It should non be weigh. The acceptor or the promisee should non deduce the different intending out of it or it should non be confounding besides. For illustration if ‘A’ says to the ‘B’ that he would wish to sell the 50 Sns of the oil. Now this offer by ‘A’ to the ‘B’ is unsure. It is non giving significance. which oil he would wish to sell to ‘B’ . Is he would wish to sell the coconut oil or he would wish to sell the mustard oil. He has non mentioned it. hence. in understanding which is expressed or understanding which is given to the other party should be certain and the last point to convey the enforceability is known as that public presentation of the understanding should non be impossible. For a really simple illustration if a miss says to a male child that you bring the stars from the sky and so I will get married you.
It is impossible act.
It can non be converted into the contract it is missing the enforceability because we know we can non convey the stars from the sky. If ‘A’ says to the ‘B’ that I will give you 1 lakh rupees if you join the two parallel lines. we know two parallel lines do non run into.
Another illustration is if ‘A’ says to ‘B’ that he will demo the ‘B’ the concealed hoarded wealth by charming so it is besides an impossible act because by thaumaturgy we can non demo the concealed hoarded wealth. Therefore. these are the elements which has been explained to you if they are available in toto. if they are available as it is in an understanding so it will go a contract. If one individual indispensable component of this is absent or one indispensable component of the valid contract is absent or losing so it can non go a contract that understanding will merely stay an understanding because it is missing one of the indispensable component of enforceability. Therefore to make at the degree of the contract we have to carry through all these demands.
Therefore we say all contracts are understanding but all understandings are non contract because to go at the phase of the contract. to make at the phase of the contract we had to hold these elements.