Contract

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Contract

 

Q: What is a contract ?

 

Ans: Any agreement that is enforceable by law is termed as "Contract".

 

Q: Under what conditions a contract does stands valid?

 

Ans: If, under any given condition, the contract fulfills the following conditions, it is said to be a valid contract:

  1. Made by free consent of parties. Consent is said to be free if it is not caused by coercion, undue influence, fraud, misrepresentation and mistake.
  2. Made for a lawful consideration, i.e. not immoral, fraudulent, forbidden by law, fraudulent, against public policy in the eyes of the law or disqualified from contracting by any law to which he is subject. [Section 11].
  3. Not expressly declared to be void.

 

Q: Who is competent to enter into a contract?

 

Ans: A person who is:

  1. Age: Major by age, as per the applicable laws.
  2. Mental Capacity: Of sound mind i.e. one who is capable of understanding the terms and conditions of the contract and is capable of making a rationale agreement.
  3. Legal Requirements: Not disqualified to enter into any contract by any law.

 

Q: How is a contract made?

 

Ans: Any contract is formed via the following steps:

  1. Proposal/Offer: One party proposes or offers the second party.
  2. Negotiation: The parties involved negotiate and come to a common goal.
  3. Acceptance: Both the parties accept the terms finalized and a contract is created.

 

Q: What is a 'Quasi contract'?

 

Ans: 'Quasi contract' is not a 'contract' but an obligation created by law (in the absence of any agreement) for certain relations resembling those that are created by Contract. It is based on the concept of equity.

 

These are termed as 'quasi contracts'. These are - (a) Supply of necessaries (section 68) (b) Payment of lawful dues by interested person (section 69) (c) Person enjoying benefit of a gratuitous act (section 70) (d) Finder of goods (section 71) (d) Goods or anything delivered by mistake or coercion (section 72).

 

Q: What constitutes 'breach of contract'?

 

Ans: The parties to a contract must either perform or offer to perform, their respective promises, if not dispensed with or excused under the provisions of the Act, or any other law.

 

Non-performance of the duty undertaken by a party in a Contract amounts to breach of contract, for which he can be made liable

 

Q: What compensations are available to the party suffering from such a breach?

 

Ans: Under the Act, if a sum is provided for in the contract as the amount to be paid in case of such a breach, or if the contract contains any other clause for penalty, the party complaining of the breach is entitled to receive from the party at fault, reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.

 

Promises bind the representatives of the promisor in the case of death of such promisor before performance, unless a contrary intention appears from a contract.

 

In a contract the agreement being enforceable by law, each party to the contract is legally bound to perform his part of the obligation.

 

Q: What is fraud?

 

Ans: Fraud constitutes in acts or omissions done with the intention to deceive or to induce a person to enter into a contract.

 

Q: When are contracts said to be completed: when the signing party submits the signed party or the receiving party receives the signed copy of the contract?

 

Ans: Contracts are said to be completed the moment the signing party signs the copy and dispatches them to the receiver.

 

Q: What is Specific Performance?

 

Ans: Specific performance means actual execution of the contract as agreed between the parties.