Discuss the mechanism of Contract and its Obligations
Introduction on:
The law of contract is a very essential law in the field of business and commerce as most of the businesses involve some contracts in their daily operation. A contract is an agreement enforceable by law. It can be stated as “every promise and every set of promises forming consideration for each other,” In other words “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. 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:
(i) Offer or a proposal; and
(ii) An acceptance of that offer or proposal.
All agreements are not studied under the Contract Act, as some of them are not contracts. Only those agreements which are enforceable at law are contracts. The Contract Act is the law of those agreements which create obligations, and in case of a breach of a promise by one party to the agreement, the other has a legal remedy.
Thus, a contract consists of two elements:
(i) An agreement; and
(ii) Legal obligation, i.e., it should be enforceable at law.
However, there are some agreements which are not enforceable in a law court. Such agreements do not give rise to contractual obligations and are not contracts.
1. Sen, A.K., & Mitra, J.K. (2012). Commercial law and industrial law. Calcutta
2. Gillies, P. (2004). Business Law (12th ed.). Washington, DC: Federation Press
We have seen above that the two elements of a contract are:
(1) an agreement;
(2) legal obligation.
Some more elements which are essential in order to constitute a valid contract. It reads as follows:
“All agreements are contracts if they are made by free consent of parties, competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void.”
Thus, the essential elements of a valid contract can be summed up as follows
1. Agreement.
2. Intention to create legal relationship.
3. Free and genuine consent.
4. Parties competent to contract.
5. Lawful consideration.
6. Lawful object.
7. Agreements not declared void or illegal.
8. Certainty of meaning.
9. Possibility of performance.
10. Necessary Legal Formalities.
1. Sen, A.K., & Mitra, J.K. (2012). Commercial law and industrial law. Calcutta
2. Gillies P. (1988) Concise contract law. Washington, DC: Federation Press
.An agreement is composed of two elements—offer and acceptance. The party making the offer is known as the offerer, the party to whom the offer is made is known as the offeree. Thus, there are essentially to be two parties to an agreement. They both must be thinking of the same thing in the same sense.
As already mentioned there should be an intention on the part of the parties to the Law of Contracts agreement to create a legal relationship. The consent of the parties to the agreement must be free and genuine. The consent of the parties should not be obtained by misrepresentation, fraud, undue influence, coercion or mistake.
The parties to a contract should be competent to enter into a contract. The agreement must be supported by consideration on both sides. Each party to the agreement must give or promise something and receive something or a promise in return The meaning of the agreement must be certain or capable of being made certain otherwise the agreement will not be enforceable at law
A contract may be oral or in writing. If, however, a particular type of contract is required by law to be in writing, it must comply with the necessary formalities as to writing, registration and attestation, if necessary. If these legal formalities are not carried out, then the contract is not enforceable at law.
A contract is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between or among them. The elements of a contract are “offer” and “acceptance” by “competent persons” having legal capacity who exchange “consideration” to create “mutuality of obligation
There is a presumption for commercial agreements that parties intend to be legally bound . On the other hand, many kinds of domestic and social agreements are unenforceable on the basis of public policy.
1. Jody Kraus, Legal Theory and Contract Law: Groundwork for the Reconciliation of Autonomy and Efficiency, in LEGAL AND POLITICAL PHILOSOPHY 385, 395-410 (E. Villanueva ed., 2002)
2. P.S. Atiyah, Contracts, Promises and the Law of Obligations, 94 LAW Q. REV. 193, 209 (1978)
An obligation is a course of action that someone is required to take, whether legal or moral. There are also obligations in other normative contexts, such as obligations of etiquette, social obligations, and possibly in terms of politics, where obligations are requirements which must be fulfilled. These are generally 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. Obligations vary from person to person: for example, a person holding a political office will generally have far more obligations than an average adult citizen, who they will have more obligations than a child. Obligations are generally granted in return for an increase in an individual’s rights or power
Obligations are generally of two types, Natural obligation and civil obligation. Natural obligations are based on morality, natural law and conscience. It is not demandable by law. There is no penalty attached to it. So any one violates this obligation can not be punished under law.
On the other hand civil obligation is a type of obligation which is legally demandable and has a penalty attached to it. The violator of this obligation can be compelled by the court of justice.
1. Obligations. (2013). Retrieved from http:// www.wikipedia.org/obligations
2. Obligations (n.d.). Retrieved from http:// www.lectlaw.com/def2 (From the Lectric Law Library’s Lexicon)
3. Civil law obligations Retrieved from http:// www.docstock.com/docs/civillawobligations
Topic Analysis:
The law of contract is mainly based on voluntarily created civil obligations. Contract mainly is made between two or more parties. As we know from the elements of the contract, a contract is mainly a set of promises. These promises are made by the both parties. But often there is a case that one or more parties do not follow the rule of the contracts. They break the promises they have made mutually. That’s why some penalties are attached to the contract paper. These penalties mention which are steps are to be taken if one party violates the promises. This law of contract is closely tied to civil obligations. Civil obligations are the obligations demanded by the present law including penalty. In the contract law, we can also see certain obligations or duties needed to be carried out by the both parties and any violator will receive a penalty. So it is clear that the law of contract is based on the act of civil obligations which are established under the present law of the country.
A contract is made to meet some perspectives. The most important thing is the security. Contract is made mainly between two business parties. Some contracts involve a huge amount of money. So it will be a great risk if there is no written agreement about the terms and conditions. At the same time, the penalty attached to the contract law under the civil obligation ensures that if any one violates the conditions of the contract he or she will be punished and there will be a remedy to the problem. The contract also specifies a certain way of doing thing or conducting a business. Contracts are written agreements. This written form also ensures that no party can decline the terms and conditions in the future. Also through a contract two parties involve in a legal relationship. The contract law is based on civil obligations. So the court can always make decisions over any violation of the contract condition as the civil obligation is legally demandable. We can deduct from the earlier discussion that contract is a lawful object and so requires legal consideration. So the contract law gives the two parties security under the civil laws.
1. Sen, A.K., & Mitra, J.K. (2012). Commercial law and industrial law. Calcutta
2.Contracts (n.d.) Retrieved from http:// www.wikipedia.org/contracts
Now comes the question of voluntary creation of civil obligation and it’s enforcement. Civil obligation that is created during making a contract is made voluntarily. We know contract is made between generally two parties. When formulating the contract, the two parties set up some rules and regulations which are mutually agreed. The both parties sit together and make some rules which are created by keeping both parties’ interest in mind. These terms are created voluntarily. We know law of contract is made under the civil obligations. These civil obligations are often created voluntarily. A contract is a set of promises which are voluntary. Parties involved in the contract set some rules accepted by them. One of the key elements of a contract is a free and genuine consent. Each party accepts the conditions. These terms are made voluntarily and with a free consent of each party. Although sometimes these conditions are less voluntary inaction as there are some moral and environmental constraints attached to the contract.
The law of contract also includes the enforcement of the penalties that has been attached to the violation of the civil obligation. As we know civil obligations are the set of rules which are legally demandable and so violation of those obligations requires punishment. As law of contract is related to the civil obligations, it ensures the enforcement of those civil obligations. This enforcement is also required for ensuring the security of the parties involved in a contract. For example, suppose two business parties agree a contract agreement where one party will give the other party 5 lacs tk when a specific job is done. And now, if one party does not get his money even after the job is done, the law of contract ensures that he or she can go to the court to file a case and get justice based on the contract agreement. So the enforcement is vital for the security.
1. Hanoch Sheinman, Contractual Liability and Voluntary Undertakings, 20 OXFORD J. L. STUD. 205, 206 (2000)
2. Contractual Agreement and civil obligations (n.d.) Retrieved from http://www.docstoc.com/docs/contractandcivilobligations
3. Voluntary obligation and normative power (n.d.) Retrieved from www.jstor.org/voluntaryobligations
4. Law of obligation and contract Retrieved from http://glennavendano.com/Course_Lectures/ECE_Laws/GenProvisionsObligations.p
Conclusion:
The law of contract is one of the most important laws that are present in the business and industrial law. Law of contract is vital for ensuring the two parties involved in the agreement. At the same time, it creates paths for solving any problems or obstacles that comes during the period of the contract. Law of contract is based on the civil obligations that are created voluntarily with the consent of each party. The enforcement of the law should be made easier and it should be ensured that all the violation of the law is eradicated through the logical enforcement of related civil obligations.
Reference:
1. Sen, A.K., & Mitra, J.K. (2012). Commercial law and industrial law. Calcutta
2. Gillies, P. (2004). Business Law (12th ed.). Washington, DC: Federation Press
3. Gillies P. (1988) Concise contract law. Washington, DC: Federation Press
4. Jody Kraus, Legal Theory and Contract Law: Groundwork for the Reconciliation of Autonomy and Efficiency, in LEGAL AND POLITICAL PHILOSOPHY 385, 395-410 (E. Villanueva ed., 2002)
5. P.S. Atiyah, Contracts, Promises and the Law of Obligations, 94 LAW Q. REV. 193, 209 (1978)
6. Obligations. (2013). Retrieved from http:// www.wikipedia.org/obligations
7. Obligations (n.d.). Retrieved from http:// www.lectlaw.com/def2 (From the Lectric Law Library’s Lexicon)
8. Civil law obligations Retrieved from http:// www.docstock.com/docs/civillawobligations
9. Contracts (n.d.) Retrieved from http:// www.wikipedia.org/contracts
10. Hanoch Sheinman, Contractual Liability and Voluntary Undertakings, 20 OXFORD J. L. STUD. 205, 206 (2000)
11. Contractual Agreement and civil obligations (n.d.) Retrieved from http://www.docstoc.com/docs/contractandcivilobligations
12. Voluntary obligation and normative power (n.d.) Retrieved from www.jstor.org/voluntaryobligations
13. Law of obligation and contract Retrieved from http://glennavendano.com/Course_Lectures/ECE_Laws/GenProvisionsObligations.p