Contract Law between India and Australia - Term Paper Example

 Contract Law between India and Australia Table of Contents 1. Introduction : Page 3 2. Brief history of Indian legal system : Page 4 3. Indian contract law : Page 5 4. Brief history of Australian legal system : Page 8 5. Australian contract law : Page 9 6. Conclusions : Page 11 7. References : Page 13 Introduction Different countries have different legal systems and administration procedures based on their constitutional requirements. It is not necessary that two democratic countries or two socialistic countries may have same laws existing in their countries. It is difficult for a country to progress without a well defined legal system. In democratic countries like India and Australia the laws are formulated by the parliament and implemented by the administration or bureaucracy. Because of the complexity of issues, tackled by a government, laws are divided into different segments like civil laws, criminal laws, administrative laws, intellectual property laws, contract laws etc. Contracts are the part of human life. Since man is a social animal it is not possible for him to progress without the assistance of others. These assistances were often sought on the basis of certain contracts. For example, when we purchase a good from the shop, or when we go to a movie, we knowingly and unknowingly engage in different contracts. On the other hand, contracts exist between countries also. While exporting goods to a foreign country or importing goods from a foreign country, a country engage in different types of contracts with another country. Larson (2003) has mentioned that a contract intends to formalize an agreement between two or more parties, in relation to a particular subject. Contracts may include a variety of matters including the sale of goods or real property, the terms of employment or of an independent contractor relationship, the settlement of a dispute, and ownership of intellectual property developed as part of a work for hire (Larson, 2003). As mentioned earlier, even the same countries which follow same type of administration may have difference in their legal frameworks. This paper compares the contract law existing in India and Australia. Brief history of Indian legal system India is the largest secular democratic country in the world. Moreover, India is the second largest country in the world as far as the population is concerned. India currently consists of 28 states and seven union territories. Each state and union territory has separate laws even though he central laws are applicable to all the individual states in India. One of the interesting aspects about India is the diversity of people. Even though, Hindi is the official language in India, most of the states have their own local languages like Tamil, Malayalam, Tulu, Sanskrit and Telugu. India is one of the founding members of the Non Alignment Movement (NAM). India never polarised towards any of the superpowers in the world and kept their own independent views and opinions on global issues. Immediately after independence from British colonial rule in 1947, Indian constitution has been formulated under the leadership of Dr. B.R. Ambadkar. The aim and objective of the Constitution was to declare India into a Sovereign Socialist Secular Democratic Republic and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY, of thought, expression, belief, faith and worship; EQUALITY, of status and of opportunity; and to promote among them all; FRATERNITY, assuring the dignity of the individual and the unity and integrity of the nation (Making Of The Constitution, n. d). As per the Indian constitution, all the people have the equal right to get social, economical and political freedom. People can believe in any religion or political party. Freedom of expression and human right issues has legal protection in India. Indian Contract law As per the Indian contract law a person is free to contract with another person or organization on any terms he chooses and agrees with the opposite party. It is necessary that both the parties to sign a legal document with respect to the agreed terms and conditions of the rights and duties of parties agreed by the contracting parties themselves. There is no validity for any contracts in India which is not supported by a written agreement between the parties. A person makes a proposal (offer). When it is accepted by other, it becomes a promise. However, promise cannot be one sided. Only a mutual promise forming consideration for each other is ‘agreement’ (Indian Contract Act, n. d). Consider a person sells a car for 50000 Indian rupees to another person. It is a promise between the two parties which will get the legal value when both the parties sign the documents about the deal. On the other hand, if a person offers some money or goods for another parson without expecting anything in return, then it is not a promise, agreement or contract, as per the Indian contract law. As per the Indian contract act, an agreement has legal values only when both the parties agreed upon the terms and conditions of the deal between them and signed a written agreement. 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 (Indian Contract Act, n. d). Thus it is not necessary that a proposal always need to be a positive one. A proposal can either lead to an agreement or can break an agreement. For example, Indian states Kerala and Tamil Nadu is fighting in the Indian Supreme Court at present about an agreement signed between these two states regarding the sharing of water a couple of decades before. Kerala has constructed a dam in its territory called Mullapperiyar Dam and signed an agreement with Tamil Nadu that they will provide water to Tamil Nadu from this dam for another 999 years for a small annual fee. But currently, Kerala government expressed concerns about the safety of the dam and wanted to construct another dam after demolishing the existing one. But Tamil Nadu has denied the Kerala proposal and the case is still going on the Supreme Court. The Mullapperiyar dam is more than 100 years old whereas the useful life of a well-designed and well-built dam is generally considered to be about 50 to 60 years. Thus the dam has already exceeded its normal lifetime by 40 to 50 years. So, the concern about its safety is not misplaced. All structures deteriorate over time and become vulnerable to breakage. So has Mullapperiyar (Mathew, n. d) A pro­posal or offer, when accepted, becomes a promise as per the Indian contract law. The person who makes the promise is the promisor and the person who accepts the promise is the promisee. It is not possible that all the agreements may convert into a contract. In order to give legal protection to a contract, it should have the following characteristics; Offer and its acceptance Free consent of both parties Mutual and lawful consideration for agreement It should be enforceable by law Agreements of social or domestic nature are not contracts Parties should be competent to contract Object should be lawful Certainty and possibility of performance Contract should not have been declared as void under contract act or any other law (Indian Contract Act, n. d). All agreements are contracts if both the parties reached the agreement without any external pressure. Indian contract law demands the authorization of some witnesses in order to give legal protection to the contract. For example, if an adult male and female like to register their marriage as per the Indian marriage act, they can do so only in the presence of at least two witnesses. The witnesses need to sign the marriage register in order to get legal protection to their marriage. Any agreement enforceable by law is a contract (THE INDIAN CONTRACT ACT, 1872, p.3). In order to make an agreement legal, both the parties should have absolute acceptance to the agreement. For example, there are many civil cases in India in which one party fuses force to get the consent of the other party for his financial gains. If the party who suffered the forceful act was able to prove the involvement of force in the contract, such contracts will become void. Absolute consent is the absolute necessity as per Indian contract law. Another requirement for making a contract legal is the age of the persons engaged in the contract. The parties should be major at the time of signing the contract in order to get legal protection. Minors are not expected to take wise decisions and hence the contracts signed by minors are not void in India. At the same time the guardians of the minors can sign the contract on behalf of the minors and when the minors become major they can cancel or modify the existing contract. Both the parties who were engaged in the contract should have reasonable mental health at the time of signing the contract. Contracts signed by the mental patients may not get legal protection in India. “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” (THE INDIAN CONTRACT ACT, 1872, p.7 &8). Persons with psychological problems cannot engage in a legal contract as per the Indian laws. The core of Indian contract law is that both the parties should have adequate maturity and capabilities at the time of signing the contract. If it is proved at any stages of the contract period that false means were utilized while signing the contract, the contract can be cancelled. Brief history of Australian legal system Australia's original inhabitants, known as Australian Aborigines, have the longest continuous cultural history in the world, with origins dating back to the last Ice Age. Although mystery and debate obscure many aspects of Australian prehistory, it is generally accepted that the first humans travelled across the sea from Indonesia about 70,000 years ago (Australian history, 2009)  Australian legal system is based on Australian common law derived from English common law. As in the case of India, Australia is also a democratic state in which the parliament is responsible for the construction of laws. Moreover, similar to India, the most important law of Australia is the Constitution of Australia, which forms the basis for the Australian government. Another similarity of Australian legal system with India is that states and territories in Australia have separate self-governance and jurisdictions even though the laws formulated in the Australian parliament are applicable to all the states in Australia. The most important difference between Indian and Australian legal system is that Australian laws are intended for the mono-cultural English population whereas Indian laws are intended for the extremely diverse Indian population. Australian Contract law Clarke (2009) has mentioned that the Australia contract law is primarily regulated by the 'common law', in relation to consumer protection (Clarke, 2009). As in the case of Indian contract law, in Australia also, the first requirement for a valid contract is the agreement. Moreover, in Australia also, the agreement is followed by an offer and acceptance before entering into the contract between two parties. The agreement should be perfect in all the respects and ambitious or incomplete agreements would normally result in the cancellation of the contract. Agreement, consideration, certainty and intention are the four major elements required for the signing a contract in Australia. Agreement is the initial step of any contract. For example, person A agrees to sell his properties to person B. Before signing a contract both the parties should negotiate each other and should reach an agreement. In short agreement is the verbal exchange of words or negotiation, before signing a contract. Consideration is the second step before signing a contract. It is the promise given in return for a promise received. Consideration is the price that is asked by the promisor in exchange for their promise and is an essential requirement in Australia before a contract will be binding. Gratuitous promises are generally not enforceable (Clarke, 2009). In Indian contract law, consideration is not a term at all whereas in Australian contract law, consideration is an essential requirement containing many complex norms and regulations. The person who is seeking the protection of the contract law should prove the intention and the nature of the relation he have with the opposite party. The third step is the intention. After the initial agreements and considerations, both the parties make clear about the intentions to engage in a legal relationship. Agreement and consideration are the first two steps which help the parties to decide whether a legal relationship is possible or not. It is not necessary that all the negotiations may result in a deal or contract. But the negotiations will decide whether to go for a signed legal agreement or not. Certainty is the fourth and last element before signing a legal contract. The terms and conditions of the contract must be specifically mentioned in the contract. No party should have lack of awareness about any of the clauses specified in the contract. Absolute surety about the terms and conditions of the contract is a must for both the parties as per the Indian contract law. The terms and conditions of the contract must be interpreted well before signing the contract. If a person will not take reasonable care to ascertain what that person is contracting about, that person must take the consequences (Networked Knowledge - Law Lectures, n. d). As per the Australian contract law, both the parties engaged in a contract should thoroughly analyse all the clauses of the contract before signing it. Once it is signed, any consequences happened from the contract must be acceptable to both the parties. Capacity of the parties to engage in a contract law also considered while signing a contract in Australia as in the case of India. Both the parties should have reasonable mental health at the time of signing a contract. Moreover as in the case of India, minors cannot sign a legal contract in Australia. Such protections are enforced in order to prevent exploitation of the disabled persons or minors. A contract between A and B cannot impose obligations on C even if the contract is intended to benefit C as per the Australian contract law (Clarke, 2009). For example, consider a person A is looking after the business of a minor person B. It is possible that the A might have engaged in different contracts on behalf of B. These contracts might result in some liabilities to the company and B is not responsible for such liabilities when he attains major status and takes charge of the company. Conclusions Contract laws exist everywhere in the world. It is not possible to engage in a legal deal without a contract between the parties. All the countries have specific contract laws. But it is not necessary that the elements of contracts laws in different countries are the same. The core of contract laws in all the countries is the same; to protect the interests of parties who engage in a contract. Contract laws are intended for safeguarding the interests of both the parties involved in the contract. India and Australia are two democratic countries with different cultural, social, political and economical elements. There are certain similarities and differences between Indian and Australian contract laws. Like in India, Australia also has different states with separate legal frame works. But the national laws are applicable to all the states both in India and Australia. Indian contract law addresses the needs of a diverse population whereas the Australian contract laws address the needs of a mono-cultural population. Agreement, consideration, intention and certainty are the basic elements of Australian contract law whereas proposal, offer, acceptance etc are the major elements of Indian contract law. Both Indian and Australian contract laws stress the importance of the mental health of both the parties at the time of signing the documents. It is unlawful in both the countries to forcefully make a party sign a document. Both the parties should have the required mental health to interpret the terms and conditions of the contract before signing it. Moreover, both the countries prohibit minors from signing a contract. Persons who sign a contract on behalf of minors should take the responsibility of any consequences occurring from the contract. References 1. Australian history, (2009), Retrieved on 19 February 2010 from http://studyinaustralia.gov.au/Sia/en/LivingInAustralia/History  2. Clarke Julie (2009), Australian contract law, Retrieved on 19 February 2010 from http://www.australiancontractlaw.com/ 3. Larson Aaron (2003), Contract Law - An Introduction, Retrieved on 19 February 2010 from http://www.expertlaw.com/library/business/contract_law.html 4. Indian Contract Act (n. d), Retrieved on 19 February 2010 from http://www.dateyvs.com/gener03.htm 5. Making Of The Constitution (n. d), Retrieved on 19 February 2010 from http://www.legalserviceindia.com/constitution/const_india1.htm 6. Mathew Roy (n. d), DAM SAFETY: MULLAPPERIYAR AND ITS IMPLICATIONS, The Hindu, Retrieved on 19 February 2010 from http://expert-eyes.org/mulla1.html 7. Networked Knowledge - Law Lectures, (n. d), Retrieved on 19 February 2010 from http://netk.net.au/Contract/02Formation.asp 8. THE INDIAN CONTRACT ACT,(1872), Retrieved on 19 February 2010 from http://chddistrictcourts.gov.in/THE%20INDIAN%20CONTRACT%20ACT.pdf Read More