Agreement entails the transformation of negotiations into a settled bargain or deal

Agreement entails the transformation of negotiations into a settled bargain or deal. Analise the law of contrat

Introduction:

A contract is a binding agreement between two or more parties that usually results in some type of performance. Without doubt, trade and commerce could not thrive if freely made agreements were not normally carried out. Contract can be viewed as a method in which men bargaining with one another can make sure that their promises will last longer than their changeable states of mind. The law of contract provides a mechanism through which private individuals can, to a certain degree, predict, control, and stabilize the future. Contracts allow people to incur reciprocal responsibilities and commitments, to make promises others can rely on, to remove some uncertainty from life, and to establish reasonable expectations for future actions.

Power-conferring rules “provide that human beings may by doing or saying certain things introduce new (duties), extinguish or modify old ones, or in various ways determine their incidence or control their operations.

The function of a power-conferring law, on the contrary, is to enable Persons to determine, within bounds, what the law is or requires. Power-conferring laws attach legal consequences to certain acts because “it is desirable to enable people to affect norms and their application in such a way if they desire to do so for this purpose.” This assignment draws an attention to the relationship with the law of contract and power-conferring rules and it have tried to cover all important points of an agreement in the light of Law of Contract.

Agreement

Agreement entails the transformation of negotiations into a settled bargain or deal. The negotiating process is obviously not contract and the law needs to be able to determine when that process has ceased and the parties have reached finality in their commercial arrangement. The traditional approach to answering the question: have the parties reached agreement? is to apply the rules of offer and acceptance. When a properly constituted offer has been made by one party and accepted by the other, then there is agreement at the moment of acceptance or, more precisely, at the moment of communication of acceptance.

This apparently simple process raises a number of questions which we have to look at, such as: Was an offer made at all? Who makes an offer in certain types of transactions, for example, in auctions or tenders? Is a price list an offer? Is an advertisement an offer? Then it is also necessary to answer further questions about the act of acceptance, such as: does acceptance have to be communicated? Can you accept by silence? Can you accept by just getting on with the commercial task? And so forth. The law relating to contracts in India is governed by The Indian Contract Act, 1872. However the Contract Act does not purport to codify the entire law relating to contracts, the Act also specifically preserves any usage or custom of trade or any incident of any contract not inconsistent with the provisions of the Act. The law of contract confines itself to the enforcement of voluntarily created civil obligation.

1 Contract Formation – Agreement

ANU College of Law’ available from:-

http://law.anu.edu.au/colin/lectures/off_acc.htm(Accessed 25 February 2012)

The law of contract is not able to take care of the whole range of agreements; many agreements remain outside the purview because they do not fulfill the requirement of a contract. An agreement is regarded as a contract when it is enforceable by law. Section 10 of the Act deals with the conditions of enforceability, According to this section, an agreement is a contract if it is made for some consideration, between parties who are competent to contract, with free consent and for a lawful object.

Law of contract

A contract is an agreement between two parties which is enforceable by law. An agreement is made when a person signifies his willingness to do or to abstain from doing anything with a view of obtaining the assent of the other party. Such act or abstinence is said to make a proposal. The person making the proposal is called the promisor and the person accepting the proposal is called the promisee. Every promise and every set of promise forming consideration for each other is known as agreement. Promises which form the consideration or part of the consideration for each other are called reciprocal promises. An agreement not enforceable by law is called void agreement. An agreement enforceable by law at the option of one party and not at the option of the other party resulted into a void able contract. Hence to make an agreement into a contract, the following has to happen.

– Agreement between the parties.

– Creation of responsibilities between the parties.

– Enforceability by law.

2. Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1 Advocate/Lecturer – 0721 438511 / 0736 504008,available from:-

www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf

Anson, a famous jurist thus defines a contact as “An agreement enforceable by law made between two or more persons by which rights are acquired by one or more to act or forbearance on the part of the other or others”.

Definition of Contract:

Section 2(h) of the Indian Contract Act provides that, “An Agreement enforceable by law is a contract”. Therefore in a contract there must be (1) an agreement and (2) the agreement must be enforceable by law. An agreement comes into existence whenever one or more persons promise to one or others, to do or not to do something, “Every promise and every set of promises, forming the consideration for each other, is an agreement. Some agreements cannot be enforced thought he courts of law, e.g., an agreement to play cards or go to a cinema. An agreement, which can be enforced through the courts of law, is called contract.

Application of Law of Contract

The Indian Contract Act of 1872 (Act IX of 1872) lays down certain general rules regarding contracts. The Act is not exhaustive. There are other Acts relating to particular types of contracts e.g. the Negotiable Instruments Act, Transfer of Property Act, etc.

The Contract Act does not affect nay usage or custom of trade, or any incident of any contract not inconsistent with the provisions of the Act.

3. Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1 Advocate/Lecturer – 0721 438511 / 0736 504008,available from:-

www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf

4. S.K.A-MA(Cal).M.Sc(Econ.Lond)

Commercial Law 25 edition (2012)

The essential elements of contract

All agreements are contract when made out of free consent of parties competent to contract, with lawful consideration, lawful object and which are not thereby declared void. The following are elements of a contract.

  1. Offer and Acceptance: There must be a lawful offer by one part and a lawful acceptance of the offer by the other and acceptance must conform to the rules laid down in the Indian Contract Act regarding offer and acceptance.
  2. Intentions to create Legal Relationship: There must be an intention (among parties) that the agreement shall result in or create legal relations. An agreement to dine at a friend’s house is not an agreement intended to create legal relations and is not a contract. But an agreement to buy and sell goods or an agreement to marry, are agreements intended to create some legal relationship and are therefore contracts, provided the other essential elements are present.
  3. Lawful Consideration: Subject to certain exceptions, an agreement is legally enforceable only when each of the parties to it gives something and gets something. An agreement to do something for nothing is usually not enforceable by law. The something given or obtained is called consideration. The consideration may be an act (doing something) or forbearance (not doing something) or a promise to do or not to do something. Consideration may be past (something already done or not done). It may also be present or future. But only those considerations are valid which are “lawful”.

5. S.K.A-MA(Cal).M.Sc(Econ.Lond)

Commercial Law 25 edition(2012)

  1. Capacity of Parties: The parties to an agreement must be legally capable of entering into an agreement; otherwise it cannot be enforced by a court of law. Want of capacity arises from minority, lunacy, idiocy, drunkenness, and similar other factors. If any of the parties to the agreement suffers from any such disability, the agreement is not enforceable by law, except in some special cases.
  2. Free Consent: In order to be enforceable, an agreement must be based on the free consent of all the parties. There is absence of genuine consent if the agreement is induced by coercion, undue influence, mistake, misrepresentation, and fraud. A person guilty of coercion, undue influence etc. cannot enforce the agreement. The other party (the aggrieved party) can enforce it, subject to rules laid down in the Act.
  3. Legality of the Object: The object for which the agreement has been entered into must not be illegal or immortal or opposed to public policy.
  4. Certainty: The agreement must not be vague. It must be possible to ascertain the meaning of the agreement, for otherwise it cannot be enforced.
  5. Possibility of Performance: The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced.
  6. Void Agreements: An agreement so made must not have been expressly declared to be void. Under Indian Contract Act there are five categories of agreements which are expressly declared to be void They are:

6. S.K.A-MA(Cal).M.Sc(Econ.Lond)

Commercial Law 25 edition(2012)

  1. Agreement in restraint to marriage.
  2. Agreement in restraint of trade.
  3. Agreement in restraint of proceedings.
  4. Agreements having uncertain meaning.
  5. Wagering agreement.
  1. Writing Registration and Legal Formalities:An oral contract is a perfectly good contract, except in those cases where writing and/or registration is required by some statute. In India writing and/or registration is required by some statute. In India writing is required in cases of lease, gift, sale and mortgage of immovable property: negotiable instruments; memorandum and articles of association of a company etc. Registration is compulsory in cases of documents coming within the purview of Section 17 of the Registration Act, e.g., mortgage deeds covering immovable property. The terms of an oral contract are sometimes difficult to prove. Therefore important agreements are usually entered into writing even in cases where wiring is not compulsory.

Low of Contract and Power-conferring Rules

Some theories of contract law characterize it as a private power-conferring rule, others as a duty-imposing one. Hart suggests contract is a legal power:

Legal rules defining the ways in which valid contracts or wills or marriages are made . . . provide individuals with facilities for realizing their wishes, by conferring legal powers upon them to create, by certain specified procedures and subject to certain conditions, structures of rights and duties within the coercive framework of the law.

7. S.K.A-MA(Cal).M.Sc(Econ.Lond)

Commercial Law 25 edition(2012)

8. Gregory Klass is Associate Professor, Georgetown University Law Center.

This Editorial is based on the following full-length Article: Gregory

http://www.trinitinture.com/documents/klass.pdf

On this picture, the point of contract law is to grant persons the power to modify, within limits, their legal obligations to one another. As Ernest Weinrib puts it, the “contract effects a voluntarily assumed change in the pre-existing legal relationship between the contracting parties,” Or in Randy Barnett’s words, to “make a contract . . . a party must explicitly or implicitly manifest an intent to be legally bound.

A contract is first of all a promise, the contract must be kept because a promise must be kept,” The function of a power-conferring law, on the contrary, is to enable persons to determine, within bounds, what the law is or requires. As Joseph Raz puts it, power-conferring laws attach legal consequences to certain acts because “it is desirable to enable people to affect norms and their application in such a way if they desire to do so for this purpose.” With the decline of the seal, Contracts provided that “neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract,” and the comments imagine a contract being formed despite both parties’ mistaken belief that their agreement is not legally enforceable. And while the black-letter rule in England states that” an agreement, though supported by consideration, is not binding as a contract if it was made without any intention of creating legal relations,” validity conditions that sort for legal purpose anticipate and enable the law’s purposive use. And that is not all. Validity conditions that sort for legal purpose are strong evidence that the law’s only function is to establish a legal power. If a law serves no purpose but to allow persons to effect legal change when they wish, it is not merely senseless but counterproductive to apply it to acts not done for the sake

9. Gregory Klass is Associate Professor, Georgetown University Law Center.

This Editorial is based on the following full-length Article: Gregory

http://www.trinitinture.com/documents/klass.pd

of their legal consequences. Now one way to try to rescue a power-conferring picture of contract is to argue that the consideration requirement is validity condition of this sort. Thus Lon Fuller’s suggestion that a consideration is a “natural formality” separating out for legal enforcement agreements in which “a legal transaction was intended.”

But this is hardly the only, or the most obvious, interpretation of the consideration rule. Other explanations of consideration include the special moral valence of exchange relationships; the consideration requirement provides at best equivocal support for an interpretation of contract law on the model of most power-conferring laws. More generally, is simply not obvious that the conditions of contractual validity are designed to sort for legal purpose.

There is, however, another way to understand contract as a legal power, one that suggests an important difference between contract law and most power-conferring laws, and which expands our understanding of normative powers in general. The core thought is that it is possible for a law to anticipate and enable its purposive use without conditioning the legal effect of a person’s actions on evidence of her legal purpose.

The design of contract law suggests that it is a multipurpose tool.

Contract law functions to give persons the power to effect change in their legal duties toward one another when they wish. But unlike pure power-conferring rules, it does not include mechanisms to sort for a contractual purpose. That fact requires explanation. One can easily imagine a contract law that employs formal conditions of validity, or that requires parties to perform a legal speech act or state their intent to be bound.

10. Gregory Klass is Associate Professor, Georgetown University Law Center.

This Editorial is based on the following full-length Article: Gregory

http://www.trinitinture.com/documents/klass.pdf

Conclusion

The elements of law of contract mentioned above must all be present. If any of them is absent, the agreement does not become a contract. An agreement which fulfils all the essential elements is enforceable by law and is called a contract. From this follow that, “All agreements are not contracts, but all contracts are agreements”. Every contract gives rise to certain legal obligations or duties on the part of the contracting parties. The legal obligations are enforce by the courts.

Contractual relationships coincide with a constellation of similarly structured extralegal practices, such as agreement, exchange, cooperation, and promise. With the decline of the seal, contracts are not marked out by formal or other conditions of validity that unequivocally sort for a legal purpose, rules that would clearly identify contract law as power-conferring. Yet there is no doubt that many parties expect and want legal enforcement and that the law is designed to facilitate such uses characteristics that distinguish contract law from other, purely duty-imposing rules. Together, these distinctive features render both pure power-conferring and pure duty-imposing theories of contract law inherently contestable.

Bibliography

Agreement,Contract Formation – Agreement

ANU College of Law’ available from:-

http://law.anu.edu.au/colin/lectures/off_acc.htm(Accessed 25 February 2012)

Definition of Contract:

Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1 Advocate/Lecturer – 0721 438511 / 0736 504008,available from:-

www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (Accessed 25 February 2012)

Arun Kumar sen MA(Cal).M.Sc(Econ.Lond)

Book I.Law of Contract,Chapter 1,Page15.

Commercial Law, 25 edition,Reprint2012,

Published by The World Press Private Limited

Kalkata-2010

The essential elements of contract

Arun Kumar sen MA(Cal).M.Sc(Econ.Lond)

Book I.Law of Contract,Chapter 1,Page15.

Commercial Law, 25 edition,Reprint2012,

Published by The World Press Private Limited

Kalkata-2010

Relationship between Low of Contract and Power-conferring Rules

9. Gregory Klass is Associate Professor, Georgetown University Law Center.

This Editorial is based on the following full-length Article: Gregory

http://www.trinitinture.com/documents/klass.pdf(Accessed 25 February 2012)

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