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The term consideration may be defined as the price paid by one party for the promise of the other –explain & illustrate
A contract is a legally enforceable provision between two or more parties with shared obligations. The remedy at law for breach of undertakes is “compensation” or monetary rectification. In equity, the remedy can be specific performance of the change or an prohibition. Both remedies grant the sullied receiver the “help of the buy” or outlook amends, which are greater than simple reliance restitution, as in promissory estoppels.
If jurisdiction in the framework is in persona or quasi in rem (over a soul or dance or a debt owing by a individual), the cartilage may not training that powerfulness unless the litigator has “peak contacts” with the advise in which the cortege sits (the facility suggest). Generally, the responsibility of peak contacts substance that the litigator has to make purloined actions that were purposefully directed towards the assembly express. Such actions may allow, among others, commercialism artifact in the nation, being integrated in therefore, visiting the posit, or transferal object in the say.
In visit to utilize powerfulness, such extremism contacts are required by
Equal if the defendant’s minimum contacts with the mart advise are constitute to survive, the room testament not exercising jurisdiction if considerations of “moderate spiel and real magistrate” would require making the suspect guard in the assembly state so unjustified as to comprise a due process immorality.
Example:
Ø All contracts are made by the process of a lawful offer by one party and the lawful acceptance of the offer by the other party. Rohim says to Korim, will you buy my house for TK. 40000?” This is an offer. If Korim says, “yes” the offer is acceptance and is a contract.
An agreement enforceable by law is a contract. In a contract there must be -The agreement must be enforceable by law.
Ø Every promise and every set of promises, forming the consideration for each other, is an agreement.
Ø Some agreements cannot be enforced through the courts of law.
According to Salmond a contract is
n “an agreement creating and defining obligations between the parties”
According to Sir William Anson
n “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.“
- Offer and acceptance
- intention to create legal relation
- lawful consideration
- lawful object
- capacity to contract
- free consent
- certainty
- possibility of performance
- Written and registered.
An agreement becomes enforceable by law when it fulfils certain conditions, these conditions, which may be called the essential elements of a contract, are explained below.
1. Offer and acceptance:
The most primary attribute of a take is that one organization makes an tender for an ornamentation that another accepts. This can be titled a conjunction of wills or consensus ad idem (converging of the minds) of two or writer parties. The conception is somewhat oppose. The manifest resistance is that a authorities cannot construe minds and the cosmos or otherwise of provision is judged objectively, with only constricted reside for questioning prejudiced intention: see Solon v. Industrialist. Richard Austen-Baker has advisable that the perpetuation of the aim of ‘gathering of minds’ may come from a misunderstanding of the Dweller statue ‘consensus ad idem’, which actually capital ‘harmony to the [one] occurrence’. There staleness be grounds that the parties had wrought when the parties possess met specified a duty. A no subjective appearance way that it is only needed that somebody gives the image of giving or accepting contractual position in the eyes of a sound someone, not that they actually did requisite to work a decrease.
There must be a lawful offer and a lawful acceptance of the offer , thus resulting in an agreement .the adjective ‘lawful’ implies that the offer and acceptance must satisfy the requirements of the contract.
Example: X offers to sell hishouse to Y at the price of tk. 400000. This is a proposal. X is the promisor or the offeror. Y is the offeree. If Y agrees to buy the house at the price stated; Y become the promise or the acceptor. There is a contract
Type of offer and Acceptance
Proposal: When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal/offer.
Offeror-A proposal is also called an offer. The promisor or the person making the is called the offeror
Offeree- The person to whom the offer is made is called the offeree.
Promise and acceptance: 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.
Promisor-The person making the proposal is called the proposal.
Promisee-the person accepting the proposal is called the promisee
2. Lawful of consideration:
Consideration is something of amount bestowed by a promissor to a promisee in interchange for something of treasure presumption by a promisee to a promissor. Typically, the aim of treasure is an act, much as making a commercialism, or a forbearance to act when one is rich to do so, specified as an individual refraining from evaporation.
Fee consists of a jural detriment and a steal. A legitimate impairment is a promise to do something or forbear from doing something that you make the statutory honorable to do, or actually doing or refraining from doing something that you don’t screw to do. A steal is something the communicator (the party making assure or pay) wants, ordinarily state one of the juristic detriments. The juristic detriment and understanding principles grow together in thoughtfulness and make a mercantilism relationship, where both parties concord to exchange something that the opposite wishes to bed.
The term consideration may be defined as the price paid by one party for the promise of the other. An agreement is legally enforceable only when each of the parties is to give something and get some thing. This something given or obtain is the price for the promise and is called consideration. Only those considerations are valid which are lawful. Subject to certain exception an agreement without consideration is void.
For example: without money not be a contract. When x his own some land intention to sell. Recently y is opposite party, he is good manner intention to buy his land taka 500000, in this moment x and y fully express their intention and consideration. Here we seen they get something and give something and here they also exchanging the appropriate money x hand to y hand and then y bye the land. So now we say these land owners, real owner or authority of this land after legal way buys. In that whole requirement has initially completed to orally or verbally and at least written ways.
Or, Hasan agrees to sell his car for taka 500000 Karim, for Hasans promise, the consideration is taka 500000.for Karims promise; the consideration is the car only.
Consideration may be classification into three types, as follows:
? .Past consideration:
When the consideration of one party was given before the date of the promise, it is said to be past. Suppose that, X sues some work for Y in the month of January (without expecting any payment.). In February Y promises to pay him some money. The consideration of X is past consideration.
Under English lae past consideration is no consideration and a contract based on past consideration is void. But under Indian law a past consideration is good consideration because the definition of consideration in Section 2(d), includes the words has dine or abstained for doing.
??. Present consideration:
Consideration which moves simultaneously with the promise is called Present consideration or Executed consideration. B buys articles from a shop and pays the price immediately. The consideration moving from B is present or executed consideration.
???. Future consideration:
When the consideration is to move at a future date, it is called future consideration or Executory consideration. In a contract the consideration may be executory on both sides. A promise may support a promise. Thus a promise to pay money at a future date for goods to be delivered at a future date is a valid contract.
There are some rules (or the Essential Factors) of Consideration are explained below.
A. Desire (or request) of the promisor is essential:
The act done or loss suffered by the promisee must have been done or suffered at the desire of the promisor. An act done without any request is a voluntary act and does not come within the definition of consideration.
Examples:
?. P sees Q’s house on fire and helps in extinguishing it. Q did not ask for his help. P con not demand payment for his services.
??. The Collector of a district asked D to spend some money on the improvement of a market and he did so. D cannot demand payment from the shopkeepers using the market for having improved the market. Durga Prasad V. Baldeo
B. The consideration must be real:
The consideration must have some value in the eye of law. It must not be sham or illusory.
· The impossible acts and illusory or non existing goods cannot support a contract.
· Therefore, real consideration comes from good consideration.
· A contribution to charity is without consideration. Therefore, it is not real consideration
Examples:
· Illusory consideration: G promises for no consideration, to give H Rs 8000. This is a void agreement. NO consideration, no contract.
· Impossible act: X promises to supply one tola of gold brought from the sun. The consideration. The consideration is sham and illusory and there is no contract.
C. Public duty:
Where the promise is already undo an existing public duty, an express promise to perform, or performance of, that duty will not amount to consideration. There will be no detriment to the promisee or benefit to the promisor over and above their existing rights and liabilities
Example:
A contract to pay money to a witness who has received a subpoena at a trail. Collins V. godefroy
D. Promise to a stranger:
But a promise made to a stranger to perform an existing contract, is enforceable because the promisor undertakes a new obligation upon himself which can be enforced by the stranger.
Example:
X wrote to his nephew B, promising to pay him an annuity of pounds 150 in consideration of his marrying C. B was already engaged to marry C. Held, the fulfillment of B’s contract with C was consideration to support X’s promise to pay the annuity .
E. Consideration need not be adequate:
Section 25(explanation 2) provides that, an agreement to which the consent of the party is freely given is not void merely because the consideration is inadequate : but the inadequacy of the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given .
The reason behind this rule is that it is impossible for the court to decide what adequate consideration is. The parties to the contract must decide the quantum of consideration and, if consent was freely given, the court will enforce the agreement. If the consideration is inadequate, the court may hold that consent of the promisor was not freely given and the agreement may become void.
F. The consideration must not be illegal, immoral Or opposed to public policy:
If either the consideration of the object of the agreement is illegal, the agreement cannot be enforced. The same principle applies if the consideration is immoral or opposed to pubic policy.
G. The consideration may be present past or future:
This follows from the definition of consideration given in the Act.
H. Consideration may move from the promisee or from any other person:
A person granted some properties to his wife C directing her at the same time to pay an annual allowance to his brother R C also entered into an agreement with R promising to pay the allowance to R. This agreement con be enforced by R even through no part of the consideration received by C moved from R Chinnya v. Ramaya. A stranger to the consideration can sue to enforce the contract, though a stranger to the contract cannot. In England, strangers to the consideration con not sue on the contract.
I. What a good consideration?:
The rules or the necessary factors for consideration can be summed up as follows: (1) There must be desire of the promisor (2) it must be real (3) reasonable (4) not illegal , immoral or opposed to public policy (5) present , past , future , and (6) from the promisee or any person .
Generally, courts do not inquire whether the deal between two parties was monetarily fair—merely that each party passed some legal obligation or duty to the other party. The disparities issue is presence of consideration, not adequacy of the consideration. The values between considerations passed by each party to a contract need not be comparable.
For instance, if A offers B $200 to buy B’s mansion, luxury sports car, and private jet, there is still consideration on both sides. A’s consideration is $200, and B’s consideration is the mansion, car, and jet. Courts in the United States generally leave parties to their own, a party gave the value of a peppercorn to the other party. As a result, contracts in the United States have sometimes have had one party pass nominal amounts of consideration, typically citing $1. Thus, licensing contracts that do not involve any money at all will often cite as consideration, “for the sum of $1 and other good and valuable consideration”.
However, some courts in the United States may take issue with nominal consideration, or consideration with virtually no value. Some courts have since thought this was a sham. Since contract dips; legal duty and therefore no legal consideration passes in these kinds of deals, and consequently, no contract is formed. However, this is a minority position.
Contracts can be a intermixture of shorthand and verbal agreements when the typewritten agreement does not comprise some damage.
· If a codified engage does not seem to be gross, verbal undertakings and handle instrument be advised.
· If a written contract does not appear to be complete, verbal undertakings and conduct will be considered.
· It is a rule of law that when a contract has been put in writing, and it appears to be complete, it will be accepted against a contradictory verbal agreement.
· In business arrangements, it is usually preferable to have a full written contract in order to avoid all the pitfalls of:
- Proving a contract existed
- Proving it to be a complete or incomplete document
- Proving verbal undertakings
1. Verbal contracts:
Verbal agreements are mostly fitting as tight as engrossed agreements Verbal agreements may be knotty to shrew, ambitious to remember incisively, and open to
Misunderstanding. In breakdown a contest on this income, the conduct and statements made by each set activity up to the assure low object testament be the blistering yield.
2. Misture contracts:
Quite oftentimes contracts are a intermixture of verbal and scrivened agree Contracts can be a collection of backhand and verbal agreements when the backhand compatibility does not take umpteen position.
3. Express Contracts:
Acquire get is one which is uttered in line verbal or backhand. When specified a diminish is cast, there is no sweat in knowing the rights and obligations of the parties.
In this type of lessen, the parties to the lessen refer the position and conditions either by show of representative or in oeuvre, at the time of forming the contract. A explicit handwritten or viva offering of the get is standard by an offeree in a way that explicitly defines legal consent to the position of the hire.
4. Implied Contracts:
The shape of an tacit promise is to be appreciated from the acts, the care of the parties and or the row of handling between them.
Contracts implicit in fact and contracts understood in law are both a share of silent contracts. But a proper implicit decrease consists of predestined obligations that happen from a mutual concord and intention of expectation, which is not uttered verbally. An silent fall cannot be labelled as implicit in law because much a change lacks the requirements of a faithful bidding. The quantity “Quasi Employ”, is notwithstanding, a more peculiar identification of contracts tacit in law. Understood contracts depend on the justification behindhand their cosmos. Thus, for an silent bridge to produce, there moldiness be whatever dealings, act or transmit of a lot in rule for them to be legally bound between the two parties, the regime module not conclude any contractual relationship between the two parties. If the parties sustain to loco mote their contractual terms, regularize after the bid has ceased to live, an assumption arises that the two parties hold mutually agreed to a new fall that has one nutrient as the old bid and a new understood fall is baculiform.
5. Quasi contracts:
There are reliable interchange which are not contracts strictly, though the parties act as if there is a sicken. The diminish act specifies the different which originate within what is called Quasi lessen.
6. Executed Contracts:
There are a contract where the parties fulfill their obligations forthwith, that is as shortly as the bid is baculiform.
An executed contract is termed as an preparation in which no new transaction is tract out to be executed by either organization. This definition could be erroneous to a definite extent, since maneuver of operate will ignoble that the assure has ended. But in slip of executed contracts, there exists few act/transaction or an obligation that has to be performed at any peak of reading in the proxy according to the contractual cost.
7. Formalities and writing contract:
An unwritten, unspoken contract, also known as “a contract implied by the acts of the parties,” which can be either implied in fact or implied in law, May also be legally binding. Contracts implied in fact are “real” contracts, that is, of no different remedy than “benefit of the bargain,” as mentioned above. However, contracts implied in law are also known as quasi-contracts, and the remedy is quantum merit, the fair market value of goods or services rendered.Oral contracts are ordinarily valid and therefore legallbinding. However, in most jurisdictions, certain types of contracts must be reduced to writing to be enforceable. This is to prevent frauds and perjuries, hence the name statute of frauds. For example, an unwritten contract would be unenforceable if for the sale of land.
Contracts that do not meet the requirements of common law or statutory Statutes of frauds are unenforceable, but are not necessarily thereby void. However, a party unjustly enriched by an unenforceable contract may be required to provide restitution for unjust enrichment. Statutes of frauds are typically codified in state statutes covering specific types of contracts, such as contracts for the sale of real estate.
8. Bilateral and unilateral contracts:
Contracts may be bilateral or unilateral. A bilateral contract is an agreement in which each of the parties to the contract makes a promise or set of promises to the other party or parties. For example, in a contract for the sale of a home, the buyer promises to pay the seller $200,000 in exchange for the seller’s promise to deliver title to the property.
In a unilateral contract, only one party to the contract makes a promise. A typical example is the reward contract: A promises to pay a reward to B if B finds A’s dog. B is not under an obligation to find A’s dog, but A is under an obligation to pay the reward to B if B does find the dog. The consideration for the contract here is B’s reliance on A’s promise or B giving up his legal right to do whatever he wanted at the time he was engaged in the finding of the dog.
In this example, the finding of the dog is a condition precedent to A’s obligation to pay, although it is not a legal condition precedent, because technically no contract here has arisen until the dog is found (because B has not accepted A’s offer until he finds the dog, and a contract requires offer, acceptance, and consideration), and the term “condition precedent” is used in contract law to designate a condition of a promise in a contract. For example,
if B promised to find A’s dog, and A promised to pay B when the dog was found, A’s promise would have a condition attached to it, and offer and acceptance would already have occurred. This is a situation in which a condition precedent is attached to a bilateral contract.
10. Aleatory Contracts:
A shared concordance which comes into issue only in case of an event of an undetermined event or a unaffected misfortune, is termed as an aleatory sicken. In this write of contracts, both the parties may act risks. For model, a shoot protection policy or a movement insurance is a identify of aleatory diminish as the insurance bearer give not recognize any benefits of the undertake unless in an circumstance of flack event or a plane intrude (in individual of jaunt shelter).
11. Unconscionable Contracts:
Unconscionable contracts are those that are unsporting and unduly one-way favors of the lot who defense at a premium end of the bargaining cause. The speech ‘unconscientiously’ substance an injure to magistrate and decency. No mentally levelheaded and honorable individual would ever brook an unconscientiously bid and enter into it.
Unconscionability of the diminish is driven by analyzing the situations and circumstances of the parties committed in the sicken, when the bid was prefab. This philosophy is practical only in cases, in which it would be wrongful or an offense to the integrity of the law method to compel a lessen same that.
13.Adhesion Contracts:
Adhesion contracts are the ones that are drafted by a party who has a larger advantage in bargaining. This means that the party who has a bargaining advantage leaves the other party with no other option than to either accept the contract or to reject it. Commonly known as “take-it or leave-it” contracts, they are often considered because for most of the businesses, it is difficult to negotiate and bargain all the terms and conditions of every contract. It is not necessary that all adhesion contracts are unconscionable contracts, since in some cases it is quite coincident for one party to have a superior bargaining advantage leaving no option for the other party. This often happens in monopolistic markets. However, courts of law refuse to implement such contracts of adhesion on the grounds that there was no mutual understanding or an acceptance between the two parties involved in an adhesive contract.
13. Void and Voidable Contracts:
A void contract implies that the involved parties are not liable to any legal obligations or rights, meaning that the parties are not legally bound with reference to that contract. In fact, a void contract means a contract has ceased to exist and that there is no contract existing between the two parties.
A void able contract, on the other hand, is an agreement between any two or more parties that has a legal binding. A void able contract can be treated as never been legally bound on a party that has been a victim of fraudulent execution or if that party was suffering from any legal disability. Also, a contract is not void unless and until any of the involved
parties, choose to treat it as a void contract by confronting its implementation. You may also like to read on:
So with these legal information on the types of contracts, I sign off by wishing you all the very best for your business ventures.
Written contracts:
· If the contract has been formally written and signed by the parties, there is an assumption that all the terms of the agreement are contained in the written document regardless of what may have been verbally agreed.
· Contracts can be a combination of written and verbal agreements when the written agreement itself covers very few terms.
· When a contract is signed, it is assumed that all the terms have been read and agreed to.
If unsigned, a written contract must:
· Be presented to and understood by all parties to be valid
· Be recognized by all parties as a contract, that is, it must look like a contract and not simply a receipt or docket.
Verbal agreements:
· Verbal agreements rely on the good faith of all the parties and can be difficult to prove.
· Conversely, in some situations, insisting on a detailed written agreement may be counter-productive if:
· The value of the transaction is not particularly high
· The presentation of a substantial document, possibly with many provisions, may raise more questions and uncertainty in the minds of the parties than it resolves, ending in the transaction not proceeding. If you are confident of the good faith of the party, a less intimidating form of written arrangement may be the best course of action.
· Do not automatically think that because it is not in writing, it can never be proved. Verbal agreements can be supported by:
Ø The conduct of the other party both before and after the agreement
Ø Specific actions of the other party
Ø Past dealings with the other party.
The contract shall be regarded as concluded, if an agreement has been achieved between the parties on all its essential terms, in the form proper for the similar kind of contracts. As essential shall be recognized the terms, dealing with the object of the contract, the terms, defined as essential or indispensable for the given kind of contracts in the law or in the other legal acts, and also all the terms, about which, by the statement of one of the parties, an accord shall be reached.
The bridge shall be terminated by way of advancement the bid (the proposition to cerebrate the contract) by one of the parties and of its acceptation (the sufferance of the proffer) by the opposite band.
The contract shall be recognized as concluded at the moment, when the person, who has forwarded the offer, has obtained its acceptance.
If in conformity with the law, the transfer of the property is also required for the conclusion of the contract, it shall be regarded as concluded from the moment of the transfer of the corresponding property.
The contract may be concluded in any structure, stipulated for making the deals, unless the law stipulates a definite variant for the given benign of contracts. If the parties tally agreed to think the contract in a definite appearance, it shall be regarded as ended after the agreed spring has been rendered to it, justified if the law does not say specified work for the donated openhearted of contracts.
The bidding in typewritten descriptor shall be terminated by aggregation one credit, subscribed by the parties, and also by way of exchanging the documents by collection, apparatus, teletype, ring, by the electronic or any another typewrite of the way of connectedness, which makes it researchable to establish for confident that the credit comes from the receiver by the bidding.
References
Ø Handbok Of Commercial Law: A. K. Sen
Ø Ewan McKendrick, Contract Law – Text, Cases and Materials (2005) Oxford University Press ISBN 0-19-927480-0
Ø P.S. Atiyah, The Rise and Fall of Freedom of Contract (1979) Clarendon Press ISBN 0-19-825342-7
Ø Randy E. Barnett, Contracts (2003) Aspen Publishers ISBN 0-7355-6525-2
Ø Scott Fruehwald, “Reciprocal Altruism as the Basis for Contract,” 47 University of Louisville Law Review 489 (2009).
Ø External links Look up contract in Wiktionary, the free dictionary.
Ø Wikiquote has a collection of quotations related to: Contract
Ø Wikimedia Commons has media related to: Contracts
[1] .Class lecture
.sheet
[2] -Written by own concept
– Ewan McKendrick, Contract Law – Text, Cases and Materials (2005) Oxford University Press ISBN 0-19-927480
Written by own concept
– Ewan McKendrick, Contract Law – Text, Cases and Materials (2005) Oxford University Press ISBN 0-19-927480
[3] -Written by own concept
– Ewan McKendrick, Contract Law – Text, Cases and Materials (2005) Oxford University Press ISBN 0-19-927480
[4] Google( http//buzzle.com/articles/types of contracts.html
-lecture sheet
[5] -P.S. Atiyah, The Rise and Fall of Freedom of Contract (1979) Clarendon Press ISBN 0-19-825342-7
-Randy E. Barnett, Contracts (2003) Aspen Publishers ISBN 0-7355-6525-2