“Discuss the law of contract confines itself to the enforcement of voluntarily created civil obligation”
Introduction
We enter into contracts day after day. Taking a seat in a bus amounts to entering into a contract. When you put a coin in the slot of a weighing machine, you have entered into a contract. In such cases, we do not even realize that we are making a contract. In that case of people engaged in trade, commerce and industry, they carry on business by entering into contracts. The law relating to contracts is to be found in the Indian Contract Act, 1872. The law of contracts differs from other branches of law in a very important respect. It does not lay down so many precise rights and duties which the law will protect and enforce; it contains rather a number of limiting principles, subject to which the parties may create rights and duties for themselves and law will uphold those rights and duties. Thus, we can say that the parties to a contract, in a sense make the law for themselves. So long as they do not transgress some legal prohibition, they can frame any rules they like in regard to the subject matter of their contract and the law will give effect to their contacts.
The 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 obtain from doing anything with a view of obtaining the assent of the other party. Such act or abstinence is said to make a proposal.
See, https://www.lawyersnjurists.com/articles-reports-journals/law-and-ethics/discuss-important-points-agreement-light-law-contract/
Indian contract Act, 1872 s2 (1) (a)
Section 2(h) Indian contract act
The person making the proposal is called the promisor and the person accepting the proposal is called the promises. 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.
Definition of contract
A contract is an agreement entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between or among them. Section 2(h) of the Indian Contract Act provides that “An agreement enforceable by law is a contract.” Therefore in a contract 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 more persons promise to one or others, to do something. In Section 2(e) “Every promise and every set of promises, forming the considerations for each other, is an agreement.” Some agreements cannot be enforced through the courts of law, e.g., an agreement to play cards or go to cinema. An agreement, which can be enforced through the courts of law, is called contract. Section 2(b) defines promise in these words: “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.
See, Arun Kumar Sen,”Commercial law” available from
http://en.wikipedia.org/wiki/Contract
Arun Kumar Sen, “Commercial law” available from
http://weblaw.haifa.ac.il/he/Events/eveFile/BrianBixTheoriesContractLaw.pdf, p.4
A proposal when accepted becomes a promise.” From the above definition of promise, it is obvious that an agreement is an accepted proposal. The two elements of an agreement are:
1) Offer or a proposal and
2) An acceptance of that offer or proposal
Offer and scope
The Law of Contract deals with agreements which can be enforced through courts of law. The Law of Contract is the most important part of commercial law and the object of the law of contract is to ensure the future securities.
According to Salmond a contract is an “Agreement creating and defining obligations between the parties.” According to Sir William Anson, “A contract is an agreement enforceable at law made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others.”
Classification of the Law of Contract
a. The rules on formation of contract
b. The rules on discharge of contract
c. The remedies for breach of contract
Sanjib Kumar, “What is the law of contract” available from
TheftAct (IX) of 1872
Steps involved in contract
An agreement becomes enforceable by law when it fulfills certain conditions. These conditions, which may be called the essential elements of a contract, are explained below:
A. Offer and Acceptance:
For a contract to exist usually one party must have made an offer and the other must have accepted it.. There should be a legal relationship between two parties and the offer may be made to a definite person, to some definite class of people. The terms of the offer must be certain, definite, unambiguous and not vague. For example, Rahim says to Karim “Will you buy my house for RS 50000?” This is an offer. If Karim says ‘Yes’ the offer is accepted, and a contract is formed.
B. Intention to create Legal Relationship:
The agreement which does not create any legal obligation will not be enforced by law. The intention of the parties must derive from the terms of the agreement and the surrounding circumstances.For example, Mita offers to go to cinema with Mukta for pleasure. In later on Mita refuses to do so, Mukta can’t go to the courts for enforcing the promise. Cinema is not legal matter.
Bookl.,law of contract, chapter 1, page 15
Commercial law, 25 edition, reprint2012
ANU College of LAW available from-
https://www.lawyersnjurists.com/articles-reports-journals/law-and-ethics/discuss-important-points-agreement-light-law-contract/
C. Lawful Consideration:
When each of the parties agrees to gives something and gets something which is legally enforceable. The something given or obtained is called consideration. The consideration may be the act or forbearance. It may be past or present or future. For example, if I go to a PC shop and want to buy a PC which price is 30000 tk. This 30000 tk. is the consideration of the PC.
D. Capacity of parties:
The parties to an agreement must be legally capable of entering into an agreement otherwise it cannot be enforced by law. If any of the parties to the agreement suffers from any disability, the agreement is not enforceable by law. For example, minor cannot be a legal person.
E. Free consent:
In the order must be enforceable, an agreement must be based on the free consent of the parties. There is absence of genuine consent if the agreement is included by coercion, undue influence, mistake, misrepresentation and fraud. That means there is no external pressure.
F. Legality of the object:
The object for agreement has been entered into must not to be illegal, immoral or opposed to public policy. Any of the consideration is not legal.
G. Certainty :
All the terms of the elements clear now. It must be possible to ascertain the meaning of the agreement, for otherwise it can’t be enforced.
H. Possibility of performance:
The agreement must be capable of being performed. If the perform is impossible to company it is not enforceable.
I. Void agreement:
An agreement so made must not behave been expressly declared to be void. There are five categories of agreements which are expressly declared to be void. They are:
i. Agreement in restraint to marriage;
ii. Agreement of restraint of trade;
iii. Agreement in restraint of proceedings;
iv. Agreements having uncertain meaning;
v. Wagering agreement.
J. Writing, Registration and Legal Formalities:
An oral contract is valid, except in those cases where writing and/or registration is required by some statute. The terms of an oral contract are sometimes difficult to prove. In India, writing is required in cases of lease, gift, sale and mortgage of immovable property; negotiate instruments; memorandum and articles of association of a company etc.
Type of contract on the basis of its validity
1. Valid contract:
An agreement which has all the essential elements of a contract is called a valid contract. A valid contract can be enforced by law.
2. Void contract [section 2(j)]
An agreement not enforceable by law is said to be void. A void contract is a contract which ceases to be enforceable by law.
3. Voidable contract [section 2(i)]
“An agreement which is enforceable by law at the option of one or more of the parties thereto, but are not at the option of other or others, is a voidable contract.” However, the contract continues to be good and enforceable unless it is repudiated by the aggrieved party.
Difference between contract and agreements:
“Every contract is an agreement but all agreements are not contracts.” The basic difference between contract and agreement is that the remedies for breach of contract and breach of agreement are way too different. Contract becomes enforceable once three conditions of legally binding agreement are met while agreement can be worked upon when two minds meet at certain point. A gentlemen agreement is not enforceable by law whereas a contract can be enforceable by law. Contracts start when there is an offer and acceptance, whereas it is not necessary for an agreement to be started from offer and acceptance.
Rashmj Jajor,2010 “Void and voidable agreement” available from:-
http://legalserviceindia.com/article/article/void-&-voiddble-agreements-315-1-html
(2004) 2 Bon CR 47,Munshi Amir Ali v Indrajeet, 1871
Section 2(i) of Indian contract act, 1872
Section 19-A of the Indian contract act, 1872
Definition of obligation
The word of Obligation, is applies within civilian legal systems, means more specifically a legal bond between two or more persons. Thus the term encompasses both sides of the equation, both the duty of the debtor and the right of the creditor. It is a tie which binds us to pay or to do something agreeably to the laws and customs of the country in which the obligation is made. These are legal obligations, which can incur a penalty for non-fulfillment, although certain people are obliged to carry out certain actions for other reasons as well, whether as a tradition or for social reasons.
Law of obligation
The law of obligations is one of the components private law elements of the civil system of law. The law of obligations seeks to organize and regulate the voluntary and semi-voluntary legal relations available between moral and natural persons with respect to obligations under contracts, both in nominate and nominate, in unjust enrichment, management of the property of another. Obligations are divided into imperfect obligations and perfect obligations. Imperfect obligations are those which are not binding on us as between man and man, and for the non-performance of which we are accountable to God only. A perfect obligation is one which gives a right to another to require us to give him something or not to do something. These obligations are either natural or moral, or they are civil.
French Civil Code of 2009
Information retrived from:
https://www.lawyersnjurists.com/articles-reports-journals/law-and-ethics/difference-contract-agreement-agreement-contract-discuss-elaborately-2/
Andrew, 20th December, 2010 “Difference between Contract and agreement
Definition of civil law
Civil law is a legal system intellectualized within the framework. This can be contrasted with common law systems whose intellectual framework comes from judge-made decisional law which gives presidential authority to prior court decisions on the principle that it is unfair to treat similar facts differently on different occasions. The civil obligation is said to be a bond containing a penalty, with a condition annexed for the payment of money, performance of covenants or the like. A civil obligation is one which has a binding operation in law, vinculum juries, and which gives to oblige the right of enforcing it in a court of justice; in other words, it is an engagement binding on the obligor. Civil obligations are divided into express and implied, pure and conditional, primitive and secondary, principal and accessory, absolute and alternative, determinate and indeterminate, divisible and indivisible, single and penal, and joint and several.
Voluntary obligation
Contract is supposed to be voluntary. Voluntary obligation is the hallmark of contract but the choices we make in contract are highly constrained. That means the commitments we make in contract are materially and morally constrained. Contracts consist in promises but these promises act on background duties. Contractual obligation is voluntary because promise and waiver are classic normative powers. So we are able to change our moral and legal position. But the making of most promises is not morally neutral. In some cases, in the absence of a promise, quasi-contract would avoid the result of unjust enrichment.
See, e.g., James Geordley, the philosophical origins of modern contract doctrine 161-299
See, e.g,. Morris Choen’s article is mention only briefly and in passing in contract as promises. Fried 1,, supra note, at 136 n. 11. For a more detailed critique of will theories that apered after contract as promises.
In other cases, in the absence of a voluntary commitment, no compensation at all would be legally required.
Conclusion
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 provision of the Act. The law of contract confines itself to the enforcement of voluntarily created civil obligation. 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. 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. So there is no doubt that many parties expect and want legal enforcement.
Reference
1) Kumar.S.“Whatis the contract law?” available from http://www.publishyourarticles.net/eng/articles/what-is-the-law-of-contract-and-explain-its-object-scope-and-essential-elements.html
2) Jajor. R. “Difference between contract and agreement” available from
http://wiki.answers.com/Q/Difference_between_a_contract_and_agreement
3) Amir.M. “Discuss about contract and agreement” available at
https://www.lawyersnjurists.com/articles-reports-journals/law-and-ethics/difference-contract-agreement-agreement-contract-discuss-elaborately-2/
4) Jajor. R.“Void and voidable agreement” available at-
http://legalservicesindia.com/article/article/void-&-voidable-agreements-315-1.html
5) Bix.B.H. “Theories of contract law and enforcing promissory morality”availablfromhttp://weblaw.haifa.ac.il/he/Events/eveFile/BrianBixTheoriesContractLaw.pdf
6) Gruning.W.D., (1999) “Common law contract for civil law students” available fromhttp://www.loyno.edu/~gruning/Sales&Leases/repealedobligations.html[Accessed September, 1999]