General Business Contracts

Leases

§ Real Property Lease

§ Equipment Lease

§ Franchise Agreement

§ Advertising Agency Agreement

§ Indemnity Agreement

§ Covenant Not to Sue

§ Settlement Agreement

§ Release

§ Assignment of Contract

§ Stock Purchase Agreement

§ Partnership Agreement

§ Joint Venture Agreement

§ Agreement to Sell Business

Contracts on the basis of creation:

a) Express contract: Express contract is one which is made by words spoken or written. Example No. 1: X says to Y, will you buy a car for Rs. 100000? Y says to X, I am ready to buy you car for Rs. 100000. It is an express contract made rally. Example No. 2: X writes a letter to Y, I offer to sell my car for Rs. 100000 to you. Y send a letter to Y, I am ready to buy you car for Rs. 100000. It is an express contract made in writing.

b) Implied contract: An implied contract is one which is made otherwise than by works spoken or written. It is inferred from the conduct of a person or the circumstance of the particular case. Example: X, a coolie in uniform picks up the bag of Y to carry it from railway platform to the ------ without being used by Y to do so and Y allow it. In this case there is an implied offer by the coolie and an implied acceptance by the passenger. Now, there is an implied contract between the coolie and the passenger is bound to pay for the services of the coolie.

c) Quasi or constructive contract: It is a contract in which there is no intention either side to make a contract, but the law imposes contract. In such a contract eights and obligations arise not by any agreement between the practice but by operation of law. e.g where certain books are delivered to a wrong address the addresses is under an obligation to either pay for them or return them.

Contracts on the basis of execution:

a) Executed contract: It is a contract where both the parties to the contract have fulfilled their respective obligations under the contract. Example: X offer to sell his car to Y for Rs. 1 lakh, Y accepts X offer. X delivers the car to y and Y pays Rs. 1 lakh to X. it is an executed contract.

b) Executory contract: It is a contract where both the parties to the contract have still to perform their respective obligations. Example: X offers to sell his car to y for Rs. 1 lakh. Y accepts X offer. It the car has not yet been delivered by X and the price has not yet been paid by Y, it is an Executory contract.

c) Partly executed and partly executory contract: It is a contract where one of the parties to the contract has fulfilled his obligation and the other party has still to perform his obligation. E.g X offers to sell his car to y for Rs. 1 lakh on a credit of 1 month. Y accepts X offer. X sells the car to Y. here the contract is executed as to X and Executory as to Y.

Contracts on the basis of enforceability:

a) Valid contract: A contract which satisfies all the conditions prescribed by law is a valid contract. E.g. X offers to marry y. y accepts X offer. This is a valid contract.

b) Void Contract: the term void contract is described as under section 2(j) of I.CA, 1872, A contract which cases to be enforceable by law becomes void when it ceases to be enforceable. In other words, a void contract is a contract which is valid when entered into but which subsequently became void due to impossibility of performance, change of law or some other reason. E.g. X offers to marry Y, Y accepts X offer. Later on Y dies this contract was valid at the time of its formation but became void at the death of Y.

c) Void Agreement: According to Section 2(g), an agreement not enforceable by law is said to be void. Such agreements are void- ab- initio which means that they are unenforceable right from the time they are made. E.g. in agreement with a minor or a person of unsound mind is void –ab-initio because a mino or a person of unsound mind is incompetent to contract.

d) Voidable contract: According to section 2(i) of the Indian contract act, 1872, arrangement which is enforceable by law at the option of one or more of the parties thereon but not at the option of the other or other, is a voidable contract. In other words, A voidable contract is one which can be set aside or avoided at the option of the aggrieved party. Until the contract is set aside by the aggrieved party, it remains a valid contract. For e.g. a contract is treated as voidable at the option of the party whose consent has been obtained under influence or fraud or misinterpretation. E.g. X threatens to kill Y, if the does not sell his house for Rs. 1 lakh to X. Y sells his house to X and receives payment. Here, Y consent has been obtained by coercion and hence this contract is void able at the option of Y the aggrieved party. If Y decides to avoid the contract he will have to return Rs. 1 lakh which he had received from X. If Y does not exercise his option to repudiate the contract within a reasonable time and in the meantime Z purchases that house from X for 1 lakh in good faith. Y can not repudiate the contract.

e) Illegal Agreement: An illegal agreement is one the object of which is unlawful. Such an agreement cannot be enforced bylaw. Thus, illegal agreements are always void – ab- initio (i.e. void from the very beginning)e.g. X agrees to y Rs. 1 lakh Y kills Z. Y kill and claims Rs. 1 lakh. Y cannot recover from X because the agreement between X and Y is illegal and also its object is unlawful.

f) Unenforceable contract: It is contract which is actually valid but cannot be enforced because of some technical defect (such as not in writing, under stamped). Such contracts can be enforced if the technical defect involved is removed.

BASIC CONTRACT ELEMENTS:

1. Proper offer and acceptance: There must be at least two parties – one making the offer and the other accepting it. Such offer and acceptance must be valid. An offer to be valid must fulfill certain conditions such as it must intend to create legal relations, its terms must be certain and unambiguous, it must be communicated to the person to whom it is made, etc. An acceptance to be valid must fulfill certain conditions, such as it must be absolute and unqualified, it must be made in the prescribed manner, it must be communicated by an authorized person before the offer lapses.

2. Intention to create legal relationship: There must be an intention among the parties to create a legal relationship. In case of social or domestic agreements, the usual presumption is that the parties do not intend to create legal relationship, but in commercial or business agreements, the usual presumption is that the parties intend to create legal relationship unless otherwise agreed upon. E.g. X invited Y to a dinner. Y accepted the invitation. It is a social agreement. It X fails to serve dinner to Y, Y cannot go to the courts of law for enforcing the agreement. Similarly, if Y fails to attend the dinner, X cannot go to the court of law for enforcing the agreement.

1. Essential elements of a valid contract: According to section 10 all agreements are contracts if they are made by free consent of the parties competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void.

a) Proper offer and acceptance: There must be at least two parties one making the offer and other accepting it. Such offer and acceptance must be valid and offered to the valid must fulfill certain conditions. Such as it must intend to create legal relationship, in terms and must be certain and unambiguous, it must be communicated to the person to whom it is made etc and acceptance to be valid must fulfill certain conditions. Such as it must be absolute. It must be made in the prescribed manner; it must be unauthorized person before the offer lapses.

b) Intention to create legal relationship: There must be an intention among the parties to create a legal relationship. In case of social or domestic agreements, the usual presumption is that the parties do not intend to create legal relationship but in commercial in business agreement, the usual presumption is that parties intend to create legal relationship unless otherwise agreed upon.

c) Free consent: there must be a free consent of the parties to the contract. According to section 14, consent is said to be free when it is not cause by

i) Order influence ii) Fraud iii) mistake iv) misinterpretation

If the consent of the party is not free then not valid contract comes into existence.

d) Capacity of parties: The parties to an agreement must be competent to contract. According to section 11 of ICA 1872 a 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 a sound mind and is not disqualified from contract by any law to which he is subject.

e) Lawful consideration: Lawful consideration is that in which both have mutual consideration.

f) Lawful object: When contract include some fraud or some illegal factor then both parties cannot file a suit against each other.

Дата добавления: 2014-01-07