‘The law of contract is perceived as a set of power conferring rules which enable individuals to enter into agreements of their own choice on their own terms- Illustrate the statement and draw your proposition in light of law of contract and any other la

Introduction:

Law of contract endows with the contractor the rights to enter into a contract of their own terms and conditions. However, Law of contract specifies certain elements for the valid contract that both the offeror and the offeree must fulfill. At the same time law of contract ensures that contractor has the right to enter into agreements of his own choice of terms and conditions.

Contract necessarily doses not means that both the party of a contract will perform the activities simultaneously. So on the based on the performance contract may be Bilateral Contract [1]where the obligation on both the party to do or abstain to certain activities. On the other hand other types of contract where on party perform the duties and other party is bound to do this task that is Unilateral Contract[2]. The case of Carlill v Carbolic Smoke Ball Company[3] and in Australian Mills v The Commonwealth[4]are examples of a ‘unilateral contract’.

Law of contract allows the contractor to enter into a contract that is to do or not to do a something, if some event occurs; collateral of such contract may or may not happen. Section 31 allows contractor such kinds of Contingent contract[5]. ‘Contracts contingent upon the happening of a future uncertain event cannot be enforced by law unless and until that event has happened. And if, the event becomes impossible such contract become void’[6].

‘Quasi Contracts’[7] are so called contract because the obligations associated with such transactions could neither be referred as tortious nor contractual, but are still recognized as enforceable, like contracts, in Courts. According to Dr. Jenks, Quasi-contract is “a situation in which law imposes upon one person, on grounds of natural justice, an obligation similar to that which arises from a true contract, although no contract, express or implied, has in fact been entered into by them.”

Finally this paper consider contractual element under law of contract and the terms and condition that a contractor can apply and different short of contracts. It deals with the individual right to enter into agreements of their own choice on their own terms. Further, it takes short look on the deferent terms or elements of contract that a contractor can apply.

 Contract A Negotiable Term

Both the English Law and Indian Contract Act have mentioned some of the vital element of a contract, which is mandatory to enter into a agreement. But both indicate a clear message, contract is a negotiable term between offeror and offeree. In the case of Hill v Harris, Diplock LJ said:

When parties have entered into a lease which has been the subject of negotiation between them over a period of something like six months, is unlikely to find the terms on which the premises are to be held, or the relevant covenants in relation to the premises, outside the terms of negotiated lease itself.[8]

In terms of tender offer in Union of India v Maddala Thattiah[9] that a clause in a tender authorizing the party inviting tenders to terminate the contract at any time for the future supplies does not destroy the very basis of the contract ant the clause is valid. In case Jones v. Vernon’s Pools Ltd[10], where, a clause contained that “shall not give rise to any legal relationships, or be legally enforceable, but binding in honour only”. So the agreement did not give rise to legal relations and, therefore, was not a contract. Here also contact act give the power to modify their terms and condition of an agreement.

 Requirements To Be Fulfill For A Valid Contract

Agreement- Offer and Acceptance

A contract is an agreement enforceable by law[11]. And Agreement is defined as ‘every promise and every set of promises forming consideration for each other’.[12] So, only those agreements that is enforceable by law is contract. An agreement is consists of two elements offer and acceptance. The person who made the offer is offeror and the person to whom it is made is offeree.

 Intention to Create Legal Relation

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.

 Lawful Consideration:

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.

 Competency to Contract

‘Every Person is competent to Contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject’[13].

            Minority/Infancy

No person is competent to enter into contract who is not the age of ‘majority’[14]. In Suraj Narain V. Sukhu Ahin[15] the minor can neither sue nor be sued upon if the agreement is void.

            Sound Mind

Contract with an unsound mind person is not a valid contract. But in Sheoratan V. Kali Chran[16] it could be valid.

            Person disqualified for making Contract

If the state or the government of a country disqualified any individual or artificial person he cannot enter into contract. For Example; the directors of corporations and companies can sue for and against them. They can make contracts through their agents. They cannot enter into contract on personal matters – example; marriage. As a company, cannot make contracts on matters beyond the objectives stated in the Memorandum of Association.

 Free consent

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. If the consent is obtained by any of these flaws, then the contract is not valid.

Legality of Object

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.

 Power Conferring rules to Enter into Contract

Contracting parties can exercise a legal powers, it is a power of a legislator, rather than of a judge or a police officer. By entering into a legally enforceable contract, the parties create new duties for themselves or modify or extinguish old ones of their own choice. Contract law does, for example, generally give the parties the power to determine their terms and condition conferring their rules, as a set of power. The purpose of the power is to allow a person determine the contractual boundary, what the law is and what is required to perform. Moreover, ‘A power conferring rule can provide its function only if it is intended so that legal performer who satisfy     its conditions normally do so purposely, because they want the legal consequences’.[17] So contract is an agreement of privately negotiated terms[18] between the parties.

The purpose of a power conferring law is to enable persons to determine, within bounds, what the law is or requires. The law attaches 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.”[19] The function of a power-conferring rule is to enable persons to effect legal change purposively. Contract law also enables its purposive use with interpretive rules that give the parties greater control over the scope of their legal obligations. While the default parties can opt into more restrictive interpretive rules or employ formal language to achieve greater certainty.

Under Contract law some sorts of rights are created by permissions. Powers of impetration are considered as a sort of rights. So, it is possible to infer from this that power-conferring dispositions can be interpreted as permissive laws, directed to subordinate power holders so that they can enact the laws that the sovereign is in a disposition to adopt. Again, a power-conferring disposition regards them as constitutive rules. Contrary to regulative rules, constitutive rules do not regulate behaviors but rather create new states of affairs or new forms of behavior. Due to the ontological unsafe assumptions of such theories that rely more or less explicitly.

The law of Contract sole function is to create a legal power. In contract two or more parties into an agreement where both parties negotiate the terms conferring rules and duties to be performed or abstain of doing something as results contract parties get the legal power conferring their rules if any of the contact parties violate the terms of contract, that affected parties can claims upon that. Again ‘when the person to whom the proposal is made signifies his assent to the proposal is said to be accepted.’[20] The task of inferring an assent and of fixing the precise moment at which it may be said to have emerged is one of obvious difficulty, particularly when the negotiations between the parties have covered a long period of time or are contained in prottracted or desultory correspondence. This may be observed in case of Brogden v Meropolitan Rly Co.[21]

The law of Contract sole function is to give the person’s the power to effect the legal changes. For example; X enter into a contract with Y. X mention in their contract that he will buy the product only if it’s directly imported from Korea. So, here law of power gives the person power to effect the legal changes. If his terms will not fulfill such requirement this contract will be void.

The rule governing the validity of deeds, which demands only that the document purport to perform the relevant legal act, not that it take legal consequences. Contractors have the right to define the act or omit to do or promise to do constituting the consideration at the desire of promisor; as it seen in Nanjunda Swani Chetti V. Kanagarju a person contracts a marriage in consideration of a promise of a settlement[22]. If such consideration does not act properly the contract could have been void. Even the character of post formation performance can effectively modify the parties’ legal obligations. Thus the parties’ course of performance can “supplement or qualify” their agreement and can be used “to show a waiver or modification of any term inconsistent with such course of performance. Not only does the law no longer require a legal speech act with the meaning.

The rule does so without requiring courts to ask whether the parties engaged in a legal speech act of one type or another. It is enough if the totality of the circumstances—the words used, the type of agreement, the parties’ background understandings, their behavior under the agreement, and other extrinsic evidence—demonstrates a contractual intent. The English rule indicates how a law might be power conferring without requiring a legal speech act for the exercise of the power.

‘An agreement, though supported by consideration, is not binding as a contract if it was made without any intention of creating legal relations.’[23] Case Rose and Frank Co. v. J.R. Crompton and Bros. Ltd[24] agreement was not a contract as the parties intended not to have legal consequences. Also in case Jones v. Vernon’s Pools Ltd.[25] the agreement was not a legal contract as it does not give rise to legal relations. If contract parties want not to enter into any short of contract that create legal obligation. Although it’s an agreement rather than a contract.

An unenforceable contract is neither void nor voidable, but it cannot be enforced in the court because it lacks some item of evidence such as writing, registration or stamping. For instance, an agreement which is required to be stamped will be unenforceable if the same is not stamped at all or is under-stamped. In such a case, if the stamp is required merely for revenue purposes, as in the case of a receipt for payment of cash, the required stamp may be affixed on payment of penalty and the defect is then cured and the contract becomes enforceable. If, however, the technical defect cannot be cured the contract remains unenforceable.

If the intention of legislature is to forbid an act in public interest, an agreement to do the forbidden act will obviously be void.[26] But if the intension is merely to regulate an act by prescribing certain terms and conditions and formalities, a contract to do the act without fulfilling the statutory requirements may not itself be void, even if the parties have to pay a penalty for the breach of the statute.[27]

There is some difference exist between the English law and Indian Contract Law. The only difference that the section makes is in the position of acceptor. In English Law when a letter of acceptance is posted, both the offeror and the acceptor become irrecocable bound.[28] But in Indian Contract Law, the acceptor does not become bound by merely posting his acceptance. He becomes bound only when his acceptance ‘comes to the knowledge of the proposer’. The gap of time between the posting and the delivery of the acceptance can be utilized by the acceptor for revoking his acceptance by a speedier communication which will overtake the acceptance.[29]

Firstly, power-conferring rules impose a duty on persons charged with enforcement to respect the exercises of the power. Second, some power-conferring rules are duty imposing in the more attenuated sense that they entail that persons ought to obey duties created by valid exercises of the power.

 Conclusion

A contract will be valid when all the term related to this contract is back by the contract law. At first there must an offer and acceptance between the parties, offer could be implied or even expressed offer. This type of offer could be given to a specific person, group of people or general offer. The acceptance of those offers could be expressed, implied and even by conduct. Moreover, this agreement will consider as a contract if it can be backed or enforceable by the law. A power-conferring rule can serve its function only if it is designed so that legal actors who satisfy its conditions normally do so purposely, because they want the legal consequences.

REFERENCES

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http://www.insitelawmagazine.com/charticles.htm available at 25th February, 2012

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http://en.wikipedia.org/wiki/Indian_Contract_Act_1872 available at 25th February, 2012

http://www.insitelawmagazine.com/charticles.htm available at 23th February, 2012