An agreement to become a contract must give rise to a legal obligation i.e. a duty enforceable by law-Discuss in reference to the essentials of a valid contract
Introduction
The contracting parties, in international sales of commodities, expect that their contract be performed as they contemplate when making the contract. However, when the circumstances change by wide swings in commodity prices between the making of the contract and the time for performance, it is frequent that one of the contracting parties seeks to evade performance of his own part in order to flee from a bad bargain. In this setting, a right of rejection is of crucial importance to both parties.
From the beginning of sales law courts and legislative draftsmen has vexed for examination of this right of rejection. This recurrent problem faced by the merchant arises whenever the seller’s tender of performance deviates in some respect from his contractual obligation. A crucial challenge is therefore to identify the circumstances in which a buyer may be entitled to terminate the contract. This question will be addressed under two major legal sources, i.e. English law and The Convention on Contracts for the International Sale of Goods 1980 (the Convention).
The courts and lawyers have used expressions to describe what is called in this study ‘the right of termination of the contract.’ In English law, the right to terminate the contract depends in large part on the nature of the term which has been broken by the seller. Therefore, the idea of termination for breach of a term, that is condition, is the most fundamental aspect
Definition of Contract
The law of contract is the foundation upon which the superstructure of modern business is built.
“Sir William Anson” The law of contract is intended to ensure that what a man has been led to expect shall come to pass that has been promised to him shall be performed.
The law of contract is applicable not only to the business community but also to other.
Definition of Agreement
A meeting of minds with the understanding and acceptance of reciprocal are legal rights and duties as to particular actions or obligations which the parties intend to exchange; a mutual assent to do or refrain from doing something; a contract.
The writing or document that records the meeting of the minds of the parties, An oral compact between two parties who join together for a common purpose intending to change their rights and duties.
Legal Obligation
An agreement to become a contract must give rise to a legal obligation i.e. a duty enforceable by law. If an agreement is incapable of creating a duty enforceable by law, it is not a contract. Thus an agreement is a wider term than the contract.’ All contracts are agreements but all agreements are not contract.’ Agreements of moral, religious or social nature are not contracts because they are not likely to create a duty enforceable by law.
Example
Mr. Amin promises to sell his house to Mr. Belal for tk.50, 00,000 then an obligation is created on the part of Mr. Amin to sell his house and on the part of Mr. Belal to buy the house at the settled price. This sort of agreement is enforceable by law and thus becomes a CONTRACT.
WHAT IS A CONTRACT?
A contract is a legally enforceable agreement between two or more parties. The core of most contracts is a set of mutual promises (in legal terminology, “consideration”). The promises made by the parties define the rights and obligations of the parties.
Contracts are enforceable in the courts. If one party meets its contractual obligations and the other party doesn’t (“breaches the contract”), the no breaching party is entitled to receive relief through the courts.
Generally, the no breaching party’s remedy for breach of contract is money damages that will put the no breaching party in the position it would have enjoyed if the contract had been performed. Under special circumstances, a court will order the breaching party to perform its contractual obligations.
WRITTEN CONTRACTS
A deal done on a handshake – “You do X for me, and I’ll pay you Y” – is a contract, because it is a legally enforceable agreement involving an exchange of promises. Most contracts are enforceable whether they are oral or written. Nonetheless, you should always have written contracts for all your business relationships.
There are several reasons why written contracts are better than oral contracts:
The process of writing down the contract’s terms and signing the contract forces both parties to think about – and be precise about – the obligations they are undertaking. With an oral contract, it is too easy for both parties to say “yes” and then have second thoughts.
WHO CAN ENTER INTO A CONTRACT?
1. Adult/Major
2. Mentally, Physically capable
3. Not a defaulter banned by the bank.
OFFER AND ACCEPTANCE
A contract is formed when one party (the “offeror”) makes an offer which is accepted by the other party (the “offeree”). An offer – a proposal to form a contract – can be as simple as the words, “I’ll wash your car for you for $5.” An acceptance – the offeree’s assent to the terms of the offer – can be as simple as, “You’ve got a deal.” Sometimes acceptance can be shown by conduct rather than by words.
The Elements of a Contract
An agreement becomes enforceable by law when it fulfils certain condition. This is condition which may be called the Essential Elements of a contract.
1. Offer and Acceptance.
2. Indentation to create Legal Relationship.
3. Lawful Consideration.
4. Capacity of Parties.
5. Free Consent.
6. Legality of the object
7. Certainty
8. Possibility of Performance.
9. Void Agreement.
· Offer and Acceptance: There must be a lawful offer by one party and a lawful acceptance of the offer by the other party or parties. The adjective lawful implies that the offer and acceptance must conform to the rules laid.
Example: Someone offer to me to buy a pen in the amount of tk.80. If I accept this, it will be a contract because here offer and acceptance is occurs.
· Intention to Create Legal Relationship: There must be an intention that the agreement shall result in or create legal relation.
Example: An agreement to dine at a friend’s house is not an agreement intended to create legal relations and is not a contract.
· Lawful Consideration: Subject to certain exceptions, an agreement is legally enforceable only when each of the parties to it gives something. An agreement to do something for nothing is usually not enforceable by law. The something given or obtained is called consideration.
Example: Someone offer me to buy a pen. It will not be a contract, because here there is no lawful consideration.
· 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, darkness, and similar other factors.
Example:
· 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.
Example:
· Legality of the object: The object for which the agreement has been entered into must not be illegal, or immoral or opposed to public policy.
Example:
· Certainty: The agreement must not be vague; it must be possible to ascertain the meaning of the agreement, for otherwise it cannot be enforced.
Example: I think that I will sale my car. It will not be a valid offer, because there have no clearly expressed in written or oral from.
· Possibility of performance: The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced.
Example:
· Void Agreement: An agreement so made must not have been expressly declared to be void.
Example:
· Agreement in restraint to marriage.
· Agreement in restraint of trade.
· Agreement having uncertain meaning.
· Wagering agreement.
POWER-CONFERRING RULES
Evidence that power-conferring laws anticipate and facilitate their purposive use can often be found in rules that condition an act’s legal consequences on evidence of the actor’s legal purpose. Many power-conferring laws require for their exercise the performance of conventional legal speech acts or legal formalities. Legislators use ritualized procedures to vote, judges use special words and writings to announce holdings, a will must be witnessed and delivered; a power of attorney must be in a proscribed form. Such conventional speech acts function, among other things, to ensure that the legal actor who performs them expects and intends the relevant legal consequences. Other power-conferring laws require other sorts of evidence of legal purpose. Thus the effectiveness of a deed depends on an expression of the right legal intention, “which is found upon examination of the whole instrument to be plainly though unethically expressed. Along similar lines, the Office of Legal Counsel has opined that the effectiveness of a presidential order does not depend on “the form or caption of the written document” but on the substance of what is said. Here a requirement that the actor performs an act with the right meaning—that she express the right illocutionary intent—ensures, inter alia, that she intends the legal consequences of her act.
Contract law contains no such rules. With the decline of the seal, there are no longer any purely formal conditions of contractual validity. In fact, as a result of the rules that govern implied-in-fact contracts, acceptance by performance, battles of the forms, the use of course of performance evidence, and the like, parties need not even express their agreement in so many words. Nor do courts commonly look for other evidence of the parties’ legal purpose. The Second Restatement of Contracts provides that “[n]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 “[a]n agreement, though supported by consideration, is not binding as a contract if it was made without any intention of creating legal relations, English courts adopt in most cases so strong a presumption of such intent that Atiyah concludes it is “more realistic to say that no positive intention to enter into legal relations needs to be shown, and that ‘a deliberate promise seriously made is enforced irrespective of the promisor’s views regarding his legal liability.
Method of Formation of Contract
I. Express Contract: Express contract is one which is expressed in word spoken or written. When such a contract is formed, there is no difficulty in understanding the right and obligation of the parties.
II. Implied Contract: The condition of an implied contract is to be understood from the acts, the conduct of the parties and/or the course of dealing between them.
III. Quasi Contract: There are certain dealings which are not contracts strictly, though the parties act as if there is a contract. The contract Act specifies the various situations.
Conclusion
The elements mentioned above must all be present. If any one 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 it follows that, every contract is an agreements but all agreement are not contract.
Every contract gives rise to certain legal obligation or duties on the part of the contracting parties. The legal obligations are enforced by the courts.
Bibliography
· Internet
· Books and other sources.
· Web search of power conforming
· Law books
· Contract law Book