The Modern Law of Contract - Essay Example

?LAW OF CONTRACT Module Module ID: CONTRACT LAW English Law of Contract serves as an important branch of law, which vehemently looks for determining the rights and obligations created by two or more persons’ entering into agreement, with the intention of creating legal relationship. Hence, contract law determines the rights and duties of the parties to the contract by legally bound them to perform or abstain from performing an act in the light of the terms and conditions agreed by the parties at the time of entering into the contract. Consequently, statutes of the contract law serve as the custodian of the rights of the parties to the contract. “The Law of Contract is intended to ensure that what a man has been led to expect shall come to pass and that what has been promised to him shall be performed.”1 (Anson, 2002, p. 3) A legal contract requires some specific terms for its proper implication. Before embarking upon the terms of the contract, it will be worthwhile to explain few terms of contract law, essential to understand the valid contract, which are as under: Offer:2 “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.” However, the offer must be unconditional and intact one in nature, without containing any ambiguity in its nature or scope. For instance, A offers B to buy one of his properties against an appropriate amount, which does not make a clear offer because neither the particular house to be sold is manifestly mentioned, nor does there exist any clear description of the amount against which the house would be sold. An offer may be specific or general; it is specific in nature when it has been made to a specific person or party. For instance, C offered D to enter into joint venture of managing an event at a hotel. Instead of D, E accepted the offer. It was held that since E had not been communicated in respect of accepting the offer, there did not create any legal liability between C and E altogether. Acceptance:3 “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.” Like offer, acceptance should also be made in an adequate manner, and without any condition that could impose bar on the actual offer. For instance, if A has offered to sell B’s laptop at $ 2000, and if B agrees to buy the same at $ 1800, it would not be stated as acceptance. Moreover, mode of acceptance should also be proper one. For instance, A has made an offer through the e-mail, the same could be accepted through the post mail, e-mail, telephone or text message etc. Additionally, acceptance should be made within an appropriate time period; otherwise, it would become time-barred. For instance, C made an offer of entering into partnership with D in an export-import business in June 2008; D did not reply to the offer till November, 2011. It was held that making acceptance of the offer after three and half years could not make the parties bound under the Contract Law, as D would have to enquire a fresh offer for the same. Agreement:4 “Every promise or every set of promises forming the consideration for each other.” Agreements may be either social or legal in nature. If an agreement has been made with the intention of entering into legal relationship, it would be legal one. And if the parties to the agreement do not have any intention of legal remedies, it would be just a social agreement. For instance, X invites Y to attend his marriage ceremony, and Y accepts the same. However, if Y is unable to attend the same, there will be no legal remedy for the same due to the nature of agreement, which is social one. In Balfour v. Balfour5, a husband had promised to pay his wife monthly pocket money during her illness. Somehow, he did not observe the same. The wife sued for the recovery of money. It was held that the contract was domestic and social in nature, where the parties did not have any intention of legal persecution. (Sachdeva & Gupta, 2002, p. 24) Consideration:6 “When at the desire of the promisor (or offerer), the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such an act or abstinence or promise is called a consideration for the promise.” V offers W to work for V’s company as a technical assistant of IT department against $20 per hour; here W’s receiving $ 20 per hour is a consideration of the agreement, while V’s receiving W’s services is the consideration on his part. Consideration is an essential element in a valid contract, without which no contract can be stated to be valid one according to Contract Law. However, consideration must be lawful, moral and decent one in nature. For instance, E and F agree to divide the share they obtain from the smuggling after successful accomplishment of the same; it would be a voidable contract. Contract:7 “An agreement enforceable at law is a contract.” Sir William Anson has defined the term contract in these words: “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 forbearance on the part of the other or others.”8 Consequently, a valid contract contains the following elements: 1. Two or more persons or parties to the contract 2. The persons or parties must be competent to entering into a contract (i.e. they have reached the age of majority, have sound mental condition, and have not be barred from any competent authority from entering into the contract) 3. There must be some agreement ad idem9 between the parties 4. The agreement must be enforceable at Law. 5. There should be some lawful consideration. 6. The objective must be lawful and moral10 7. The proposal and acceptance must be made in an appropriate mode 8. The acceptance must be made within appropriate period of time from the making of a proposal 9. Both the proposal and acceptance must be communicated in a prescribed way within an adequate time period Absence of one or more above-described conditions, essential for a valid contract, may turn the contract as void, voidable or invalid one. Voidable Contract:11 A contract is voidable in nature provided the consent of one or more parties has been obtained through coercion, undue influence, fraudulence or misrepresentation. The aggrieved party can revoke it on the basis of the cheating made by the other party, though burden of proof would be on the aggrieved party, which intends to make revocation for the same. For instance, A shows his 2000 yards house to B, and enters into agreement with him against the price determined by the parties. Somehow, he gives the possession of some other property, which will make the contract voidable at the part of B, and he can sue for the revocation of the contract. Void Contract:12 A contract is void ab initio provided it does not the basic elements essential for a valid contract. For instance, a contract that has been entered into without determining of a legal consideration is void from the time of its coming into existence. Similarly, a contract that forbids one or more parties from marriage or agreements with others is a void contract. Wagering Contract:13 Wagering contracts refer to some specific performance to be made on the basis of some happenings that are beyond human control. For instance, A promises to grant B $ 50,000 provided C dies after two days. Moreover, agreement of share from gambling etc also comes under the definition of wagering contract. A valid contract can be communicated either in express or implied form or both. Express Contract: If in an agreement, the proposal is made in words either spoken or written, it is called an express contract. “Express terms are those specifically agreed by the parties. Express terms can be in writing or oral or both.”14 (Wishart, 2008, p. 397) Express terms are considered as more valid in nature, due to the very reality that these terms contain evidence in them and could be presented before the court of law as documentary proof of a contract entered into by the parties to the contract. In addition, express terms also prove the validity of communication between the parties. According to the Law of Contract, “the communication of an offer is complete when it comes to the knowledge of the person to whom offer has been made.”15 Thence, the terms of a contract are more emphatically conveyed to the second party in express contract in comparison with the implied one. Implied Contract: An offer or proposal is made otherwise than words, it would be an implied contract. The terms of contract will be observed through conduct or performing of or abstinence from an act. For example, when a person enters a cinema or theatre, it simply means that he agrees with the fare of that recreational spot to be charged from him during his stay there. In addition, he is also expected to enjoy that specific entertainment show at that public place without claiming special privileges or facilities, though the facilities should be same as described by the management of that place. Consequently, nature and clauses of an implied contract are kept in view by the courts of law while giving judgement in the contract law. Conclusion: To conclude, it becomes evident that law of contract presents a complete and comprehensive scenario, terms and conditions for business dealings and commercial transactions. The law also provides remedies to the parties have wrongly been involved into invalid, voidable and void contracts, through fraudulence, misrepresentation and coercion etc. The statute of law also revokes conditional and wagering contracts, which would not be entertained because of their being void and unlawful ones. References Anson, Sir William. (2002) Law of Contract 28th Edition Oxford University Press p 3 (Retrieved from http://www.reportbd.com/articles/38/1/Contracts/Page1.html) Stone, Richard (2005) The Modern Law of Contract 6th Edition Cavendish Publishing pp 198-217 Sachdeva & Gupta. (2002) Mercantile and Industrial Law Ajanta Prakashan Publishers, Delhi pp 8-38 Wishart, Windy-Chen. (2008) Contract Law 2nd Edition Oxford University Press pp 395-485 Read More