ch-1 nature of law

8/7/2019 Ch-1 Nature of law

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Copyright 2004 South-Western


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Introduction

Law includes all the rules and principles which

regulate our relations with other individuals and

with the State.

The State regulates the conduct of its people by

a set of rules, which to be followed by the

people.

Such rules of conduct, if recognized by theState and enforced by it on people, are termed

as Law.


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Object of Law

To establish socio-economic justice and remove

the existing imbalance in the socio-economic

structure.


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CHARACTERISTICS OF LAW

1. Law is body of rules and principles relating to

actions of individuals.

2. Law is the guidance or conduct of persons-both

human and artificial.3. Law is imposed.

4. Enforced by state.

5. Two basic ideas involved in law.

(i) To maintain some form of social order in group and

(ii) To compel members of the group to be within that

order


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CONSTITUTIONAL LAW OFINDIA.

Came in force on January 26,1950.

All public authorities viz. Legislative,

administrative and judicial take their powers

directly or indirectly from it & constitution

derives its authority from the people.

Fundamental rights available


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Essentials of Law

There are certain essentials which must be present in

law in order to make it effective. These are:

(i) Predictability,

(ii) Flexibility and

(iii) Reasonable application and coverage.

Law must be such that one is enabled to predict with

some accuracy the legal consequences of an action.For example, business people enter into contracts on

the premise that if the other party fails to keep its

promise, they would have certain remedies under the

law.


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Cont

Law must be flexible in the sense that it must not be so

rigid and unchanging as to be impossible to mould to

the present. And, if at a later stage, it is found that the

existing law is incapable of tackling certain changes,then it must be accommodate them by amendments

thereto.

Law must be reasonable both in its application and

coverage. Wide publicity should be given to the lawenacted so as to give an opportunity to those affected

by it to know its requirements, and consequences for

non-compliance of those requirements.


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BRANCHES OF LAW

1. Constitutional law

2. Administrative law

3. Criminal law4. Civil Law

5. International law

6. Commercial/Mercantile law.


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Nature of Mercantile Law

It is used to denote that branch of law which

is concerned with such matters as are usually

the subject of what may be called ,mercantile

transactions-

Deals with contractual situations and the right

and obligations arising out of mercantile

persons like-Single individual, a partnership, a joint stock company


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Sources Of Mercantile Law

1. English Mercantile Law

2. Statute Law

3. Judicial decisions or the system of precedents4. Customs and usages


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English Mercantile Law

Main sources of the law is the common law of

England as modified and supplement by Equity and

Statute Law.

Common Law:1. It refers to a system of law based on English customs, usages

and traditions which were developed over centauries.

Equity: It is separately from common law is based upon concept of

justice developed by the judges.Statute Law: Law laid down in the act of Parliament.


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Nature of Contract

It is that branch of law which determines the

circumstances in which promises made by

parties to a contract shall be legally binding on

them.

Its rules define the remedies that are available

in a court of law against a person who fails to

perform his contract. It may be said that the law of contract is to

ensure the realization of reasonable expectation

of the parties who enter into the contract.


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THE INDIAN CONTRACT ACT, 1872

The Act deals with-

1. The general principles of the law of contract ( Sec 1-75)

2. Some special contracts ( Sec 124- 238 )


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INTRODUCTION

Law of contract deals with such

promises which create legal

obligations

Excludes obligation which are

not contractual in nature

Law of Contact deals with the

promises given for some value.

This value is called

consideration


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Definition of Contract

A contract is an agreement made between two

or more parties which the law will enforce.

Sec 2(h)- a contract is an agreement

enforceable by law.

Salmond- an agreement creating and defining

obligations between the parties.


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Contract

Contract consist of two element-

1. Agreement

2. Enforceability by law


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Agreement and Contract

Agreement

Offer+ Acceptance

May not create legal

obligation All agreements are not

contracts

Agreement is a wider

concept

Agreement is not a

concluded or a binding

contract

Contract

Agreement+Enforceability

Necessarily creates legal

obligation All Contracts are agreement

Contract is a specie of an

agreement

Contract is Concluding andbinding


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An Obligation which does not have its origin in

agreement does not give rise to a contrac

Some of such obligations are:

1. Torts or civil wrongs

2. Quasi-contracts

3. Judgement of Courts

4. Relationship between husband and wife,

trustee and beneficiary

i.e status obligations.

These obligations are not contractual in

nature, but are enforceable in the court of la


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Law of contract creates Jus inpresonam & Jus in rem

Jus in personam:

It means a right against or in the respect of a

specific person.

Jus in personam is available against particular

person

Jus in rem:

It means a right against or in respect of a

thing. Jus in rem is available against the world

at large


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Essentials Element of A Valid Contract

Sec- 10: All agreement are contracts if they are

made by free consent of parties competent to

contract, for a lawful consideration and with a

lawful object and are not expressed declared tobe void.


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Essentials Element of A Valid Contract

1. Offer and acceptance

2. Intention to create legal relationship

3. Lawful Consideration

4. Capacity of parties competency

5. Free and genuine consent

6. Lawful Object

7. Agreement not declared void

8. Certainty and possibility of Performance

9. Legal formalities


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1. Proposal and Acceptance:

When one person signifies to another his willingness to do orabstain for doing anything, with a view to obtaining the assentof that other person to such act or abstinence, he is said tomake a proposal.

When the person to whom the proposal is made signifies hisassent thereto, the proposal is said to be accepted. A proposalwhen accepted becomes a promise.

2. Consideration:

When at the desire of the promisor, the promisee or any otherperson has done or abstains from doing or does or abstainsfrom doing something or promises to do or to abstain fromdoing something such act is called a consideration for the

promise.


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Every contract consists of two parts: (1) promise and (2)Consideration for the promise. An agreement withoutconsideration is void. An agreement is a contract, only if it ismade for a lawful consideration and with a lawful object.

The consideration or object of an agreement is unlawful if

It is forbidden by law

Is of such nature that, if permitted, it would defeat theprovisions of any law

It is fraudulent

It involves or implies injury to the person or property ofanother

The court regards it as immoral or opposed to public policy.


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3. Capacity ofParties:

Sec. 11 of the act states that every person is competent tocontract who is of the age of majority according to the law towhich he is subject, and who is of sound mind and is notdisqualified from contracting by any law to which he is

subject.4. Free Consent:

The parties must be ad-idem, i.e., both the parties must agreeupon the same thing in the same sense. Consent of partiesmust be free from coercion, undue influence, fraud,

misinterpretation or mistake.5. Must not be declared void:

A void agreement is not enforceable by law. It has no legalsanctity, which are opposed to public policy like agreement inrestraint of trade, or in restraint of marriage or in restraint of

legal proceedings.


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6. Writing and registration:

Oral contract is a valid contract. However, the contract mustbe in writing and registered, if so required by law, for e.g.,mortgage, lease, MOA, AOA, etc. registration is compulsory

in respect of certain contracts under the Indian RegistrationAct, 1908.

7. Legal Relationship:

Agreements which create legal relations or are capable ofcreating legal relations are contracts. There must be common

intention of the parties to create legal relations in order toconstitute a contract.

8. Certainty:

The terms of contract must be clear and must not be vague.


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9. Possibility of performance:

The contracts must be capable of being performed.

10. Enforceable by law:A contract in order to be valid must be enforceable by law

which element distinguishes agreement and contract.


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Classification of Contracts

1. According to Validity:

Voidable contract

Unenforceable contract

Void contract Void agreement

Illegal agreement

2. According to formation:

Express contract Implied contract

Quasi contract

E- Commerce contract


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Classification of Contracts

3.According to performance

Executed contract

Executory contract

Unilateral or one-sided contract

Bilateral contract


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Voidable Contract

When one of the parties to the contract has notexercised his free consent.

All voidable contracts are induced by coercion, undueinfluence, fraud or misrepresentation.

Example: a contract is treated as voidable at the optionof the party whose consent has been obtained bycoercion or undue in or fraud or misrepresentation.

Example: X threatens to kill Y if he does not sell hishouse for Rs. 1,00,000 to X. Y sells his house to X andpayment. Here, Ys consent has been obtained bycoercion and hence this contract is voidable at theoption of Y.


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Void Contract

In other words a void contract is a contract

which was valid when entered into but which

subsequently became void due to

impossibility of performance, change of lawor some other reason.

Example: X offers to marry Y. Y accepts

Xs offer. Later on Y dies. This contract wasvalid at the time of its formation but became

void on the death of Y.


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Void Agreement

An agreement not enforceable by law is said to

be void.

It does not create any legal rights or obligations.

Example: An agreement with minor or an

agreement without consideration.


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Illegal Argeement

The illegal agreement is one the subject of

which is unlawful.

Example: X agrees to Y Rs. 1,00,000 if Y

kills Z and claim Rs. 1,00,000. Y cannot

recover from X because the agreement between

X and Y is illegal as its object is unlawful.


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Unenforceable Contract

Which can not be enforced in a court of law

because of some technical defect like absence

of writing, remedy has been barred by lapse of

time.

E.g., unstamped promissory note.


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Express contract

Express contract is one which is made by words

spoken or written

Example: X says to Y Will you buy my

car for Rs. 100000? Y says to X I am ready

to buy your car for Rs. 100000. It is an express

contract made orally.


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Implied Contract

Implied Contract is one which is made otherwisethan by words spoken or written. It is inferred fromthe conduct of a person or the circumstances of theparticular case.

Example.:

X, a coolie in uniform picks up the luggage of Y tocarry it from railway platform to the taxi withoutbeing asked by Y to do so and Y allows it. In thiscase there is an implied offer by the coolie and animplied acceptance by the passenger. Now, there isan implied contract between the coolie and thepassenger and the passenger is bound to pay for theservices of the coolie.


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Quasi Contract

Quasi contracts arise out of obligations enjoyed

by one person from the voluntary acts of the

other which are not intended to be performed

gratuitously.


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Executed contract

Where both the parties to the contract have

fulfilled their respective obligation under the

contract.

Example: X offers to sale his car to Y for

Rs. 50000. Y accepts Xs offer. X delivers the

car to Y and Y pays Rs. 50000 to X. It is an

executed contract


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Executory Contract

Where both the parties to the contract have

still to perform their respective obligations.

Example: X offers to sale his car to Y for

Rs. 50000. Y accepts Xs offer. If the car has

not been delivered by X and the price has not

been paid by the Y, it is an executory contract.


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Unilateral Contract

A unilateral contract is one wherein at the time

the contract is concluded there is an obligation

to perform on the part of one party only.

Eg. A makes payment for bus fare for his

journey from Mumbai to Pune. He has

performed his promise. It is now for the

transport company to perform its promise.


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Copyright 2004 South Western

Bilateral Contract

A bilateral contract is one wherein there is an

obligation on the part of both to do or to refrain

from doing a particular thing. In this sense,

bilateral contracts are similar to executorycontracts.

ch-1 nature of law

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