The concept of law is that power-conferring rules are seen as statements which cannot be reduced to mandatory norms. If we understand power conferring rules as a special kind of normative statements. Power-conferring rules differ from mandatory norms with respect to their structure, the way in which they contribute to their addressees practical reasoning and their impact on social life.Theory of power-conferring rules that would allow us precisely to account for them and for their difference from mandatory norms with respect the perspectives. 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.
Power-conferring rules
The concept of law is that power-conferring rules are seen as statements which cannot be reduced to mandatory norms. The concept of law the distinction between mandatory norms and power conferring rules seems to be wrongly presented a similar to other not equivalent distinctions. Different criteria for distinguishing primary norms from secondary norms the first refers to the difference between duty-imposing rules and power-conferring rules, the second to that between rules regulating actions which imply movements or physical changes and rules concerning acts which lead to normative changes and that between rules about actions individuals should or should not do and rules about rules of the first type.
What power conferring rules are not?
Power conferring rules are not deontic or regulative norms. This expression deontic or regulative norms may sound strange and seems to be a perfect example of a pleonasm, if a norm is a sentence that commands, prohibits or permits something, then to speak of deontic norms or regulative norms is like speaking of rectangular rectangles. The same thing happens if norms are understood as the meaning of such sentence. And it says the same if norms are conceived as the result of acts of prescription. Thus whatever perspective we adopt to account for norms, their characteristic is always precisely their regulative or deontic character. Hence, if one assumes that this character is a defining element of norms, our thesis would be that power-conferring rules are not norms.
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 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:
ü Is an advertisement an offer?
ü Then it is also necessary to answer further questions about the act of acceptance, such as: does acceptance have to be communicated?
ü Can you accept by silence?
ü Can you accept by just getting on with the commercial task?
Law of contract
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..
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 results into a voidable contract. Hence to make an agreement into a contract, the following has to happen.
– Agreement between the parties.
– Creation of responsibilities between the parties.
1 Contract Formation – Offer & Acceptance
ANU College of Law’ available from:-
http://law.anu.edu.au/colin/lectures/off_acc.htm(Accessed 25 February 2012)
2 Void & Voidable Agreement.Publish:Septembet 14 2010,Author :rashmi jajoria’ available from:-
http://legalservicesindia.com/article/article/void-&-voidable-agreements-315-1.html (Accessed 25 February 2012)
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
– Enforceability by law.
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.
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 –
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. A contact comes into existence when a definite offer has been unconditionally accepted.
Mode:
The offer can be made orally, in writing, or impliedly provided that the mode of offer or acceptance is in tandem with any statutory requirements as to form e.g. Contract for sale of Land need to be in writing.When a person signifies his willingness to do or to abstain from doing anything with the view of obtaining the assent of the other to such act or abstinence, he is said to
4 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
5 S.K.A-MA(Cal).M.Sc(Econ.Lond)
Commercial Law 25 edition(2012)
make a proposal. The person proposing is also called an offeror or a promissor. The existence or otherwise of an offer may some times be the source of an acute dispute between parties.
Characteristics / Requirements / Legal rules regarding offer
– May be express or implied.
– Offer must give rise to a legal obligation.
– Terms of offer must be definite and certain i.e. should not be vague, uncertain or ambiguous
– An offer must be distinguished from an invitation to offer, or declaration of intention e.g. an advertisement
– The offer must be communicated.
– An offer may prescribe the method of communication of acceptance thus becomes a conditional offer.
– An Offer must be made with a view of obtaining the consent of the other party to do so or abstain from doing the particular act.
– Offer should not impose an unnecessary obligation to communicate non-acceptance e.g. “If acceptance is not communicated by next Sunday, I shall presume that you have accepted”.
6 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
7 S.K.A-MA(Cal).M.Sc(Econ.Lond)
Commercial Law 25 edition(2012)
8 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
ACCEPTANCE
When a person to whom an offer is made signifies his assent thereto, the offer is said to be accepted. An offer when accepted becomes a promise.
Essentials of a legal acceptance.
– Acceptance should be by the person to whom the offer is made.
– Acceptance may be express or implied i.e. express by word spoken or written or implied by an act in line or in compliance.
– Must be absolute or unqualified. I.e. acceptance in full. It would otherwise be a counter offer.
– Must be in the mode prescribed. If reply is required by a telegram and offeree accepts replies by fax, it amounts to non-compliance.
– Acceptance must be for an offer communicated.
– Must be accepted within the time fixed.
– Acceptance must be made before the offer lapses or is revoked.
– Acceptance must be made with the intention to fulfill the terms.
– Acceptance subject to a specialty contract would be valid only on the formal contract being signed by all the parties.
9 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
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
For an agreement to constitute a contract, the parties thereto must have intended it to have legal consequences. Even though the agreement may have all other agreements of valid contract it would not be a contract until the intention to create a legal relationship is established. The court has proceeded to do by formulating certain principles or presumptions that will apply in absence of an express declaration to the contrary. These presumptions are as follows:
a. Business agreements.
Unless specifically stated or implied otherwise, all business agreements are made with intention to crate legal relationship.
b. Domestic or family agreements-
i. Agreements between husband and wife;
1. Where a husband and wife are living together amicably, there is a legal presumption that any agreement they enter into is not legally binding – (Balfour Vs. Balfour) This is founded on the necessary caution to prevent ill advised litigation from destroying love and affection between couples.
10 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
2. Where the husband and wife have separated or are about to separate so that the marriage is practically over any agreement entered into by the spouses is presumed to have been intended to be legally binding- Meritt Vs. Meritt.
ii. Agreement between parent and child:
These are made on goodwill of the parties and are not legally binding.
iii. Agreements between close relatives
Based on love and affection in their said relationship are also non enforceable.
c. Social agreements
These would not be enforceable unless it is agreement under seal.
Lawful Consideration:
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”.
11 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
12 S.K.A-MA(Cal).M.Sc(Econ.Lond)
Commercial Law 25 edition(2012)
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.
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.
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. A contract must be entered for lawful consideration and lawful object. Lawful object is with regard to the purpose or design i.e. the object for entering in to the contract must be legal.
Agreements opposed to public policy:
Public policy means the endeavors of the law or government for public good, welfare or interest. Act asserting the contrary to public policy is void. The term public policy is so widely interpreted that is seen as an unruly horse. It is vague and often misused.
13 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
14 S.K.A-MA(Cal).M.Sc(Econ.Lond)
Commercial Law 25 edition(2012)
The following agreements have been identified to be opposed to public policy:
ü Agreement for trading with an enemy of the state
ü Agreement interfering with administration of justice
ü Agreement to vary period or limitation
ü Agreement creating interest opposed to duty.
ü Agreement interfering with marital status: This becomes immoral and duty avoiding and so void.
ü Agreement in restraining marriage: This is void if the restraint is of a major’s marriage
Certainty:
The agreement must not be vague. It must be possible to ascertain the meaning of the agreement, for otherwise it cannot be enforced.
Possibility of Performance:
The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced.
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:
ü Agreement in restraint to marriage.
ü Agreement in restraint of proceedings.
15 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
ü Agreements having uncertain meaning.
ü Wagering agreement
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.
16 S.K.A-MA(Cal).M.Sc(Econ.Lond)
Commercial Law 25 edition(2012)
17 S.K.A-MA(Cal).M.Sc(Econ.Lond)
Commercial Law 25 edition(2012)
Conclusion
The Contract draws distinction between an agreement which is only void and the one in which the consideration or object is also unlawful. An illegal agreement is one which is actually forbidden by the law; but a void agreement may not be forbidden, the law merely says that if it made, the courts will not enforce it. Thus every illegal contract is also void but a void contract is not necessarily illegal. 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”.
Bibliography
Agreement,Contract Formation – Offer & Acceptance
ANU College of Law’ available from:-
http://law.anu.edu.au/colin/lectures/off_acc.htm(Accessed 25 February 2012)
Law of Contract ,
Void & Voidable Agreement.Publish:Septembet 14 2010,Author :rashmi jajoria’ available from:-
http://legalservicesindia.com/article/article/void-&-voidable-agreements-315-1.html (Accessed 25 February 2012)
3 Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (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.
The essential elements of contract ,Offer and Acceptance:
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (Accessed 25 february 2012)
Arun Kumar sen MA(Cal).M.Sc(Econ.Lond)
Characteristics / Requirements / Legal rules regarding offer
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (Accessed 25 february 2012)
Acceptance ,Essentials of a legal acceptance.
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (Accessed 25 february 2012)
Intentions to create Legal Relationship
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (Accessed 25 february 2012)
Business agreements,Domestic or family agreements,Social agreements.
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
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.
Lawful Consideration:,Capacity of Parties,Free Consent:
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
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.
Legality of the Object:,Agreements opposed to public policy:
Odiwuor Kelly – B.Com (Acc. & Aud. Option), L.L.B (Crim., Ban. & Ins. Option), Dip-Law (KSL) 1
www.oakadvocates.co.keuserfilesLAW%20OF%20CONTRACT%20FOR%20ACBM.pdf (Accessed 25 february 2012)
Certainty:.Possibility of Performance:,Void Agreements:
Arun Kumar sen MA(Cal).M.Sc(Econ.Lond)
Writing Registration and Legal Formalities