Name: Sumit Behera ROLL: 440 ROOM: 41 Semester: Ii Subject: Business Regulatory Framework - I Assignment YEAR: 2009 College: St. Xavier'S College (Autonomous Under C.U)
Name: Sumit Behera ROLL: 440 ROOM: 41 Semester: Ii Subject: Business Regulatory Framework - I Assignment YEAR: 2009 College: St. Xavier'S College (Autonomous Under C.U)
ROLL: 440
ROOM: 41
COURSE: B.COM [Honours]
SEMESTER: II
SUBJECT: BUSINESS
REGULATORY FRAMEWORK - I
ASSIGNMENT
YEAR: 2009
COLLEGE: ST. XAVIER’S
COLLEGE
[Autonomous
Under C.U]
WHAT IS A CONTRACT?
1. an agreement
2. the agreement should be enforceable by law
An agreement is defined as every promise and every set of promises forming the
consideration for each other and a promise is an accepted proposal.
A contract is an agreement between two or more parties to do, not do, or promise something.
Contracts can come in many forms — they can be oral or written, implied or express, and legally
enforceable or not. The strongest contract, in terms of enforceability, has an offer, acceptance,
consideration for the exchange, clearly sets out the terms of the agreement without ambiguity,
and is signed by the involved parties with proper capacity to enter into the contract. Weaker
contracts include verbal agreements or contracts drawn up by parties in direct violation of state
or federal laws. There are numerous aspects related to valid contracts; in fact, an entire course in
law school is often devoted to contract law.
While we tend to think of written contracts when we talk about contracts, the most common type
of contract is actually an oral contract. In fact, we pretty much enter into at least one oral contract
every day. For example, a parent might tell his or her child that they will get a reward if they
behave properly at a certain event. If the child agrees, then you have a type of oral contract —
albeit one that isn't legally binding!
Contracts can be implied or express. That is, the entire contract, or one or more of its terms, can
be implied or express. Typically, when we think of contracts we think of express contracts. For
example, in a contract for a monetary loan, you will likely promise to pay a certain monthly rate
at a certain interest rate until the loan is paid off. In addition, you probably will agree to late
payment fees as well. These terms are explicitly laid out in an express, written contract.
Sometimes, however, a contract term or the entire contract itself is implied. For example, when
you order food at a restaurant you are entering into a implied, oral contract. You and the server
do not explicitly state the offer and acceptance for the steak you ordered with a list price of 32
US Dollars (USD) but that agreement is implied. The basic elements of a contract, namely an
offer, acceptance of the offer, and consideration for the exchange, are all implied.
Offer and acceptance, sometimes also called “meeting of the minds” is a fundamental part to a
contract. Without it, we might bind parties to contracts who did not want or intend to be party to
the contract. Consideration, on the other hand, ensures that something is being exchanged. In
some cases, the law requires that consideration be adequate, that is, a relatively reasonable price,
or nominal, where just a dollar will do. Other times, the requirement of consideration may be
waived in the interest of preventing injustice.
Contracts may be enforceable by law or they may not. The example of the agreement between
the parent and child would not be enforceable by law whereas the agreement for a loan likely
would be enforceable by law. Whether a contract is enforceable by law depends on numerous
factors, the primary factor being whether the parties to contract intended the contract to be
legally binding or legally enforceable.
A contract may not be legally enforceable for a variety of factors. Problems on the face of the
contract can make it void. If one of the parties to the contract has diminished capacity whether it
be due to age or mental condition the contract will most likely be unenforceable. Fraud or
misrepresentation by a party to a contract can void the contract as can contract terms that violate
controlling laws.
TYPES OF CONTRACT
Bilateral v. unilateral contracts
Unilateral contract of adhesion on timekeeping ticket dispensed by vending machine at parking
lot entrance
Contracts may be bilateral or unilateral. The more common of the two, a bilateral contract, is an
agreement in which each of the parties to the contract makes a promise or promises to the other
party. For example, in a contract for the sale of a home, the buyer promises to pay the seller
$200,000 in exchange for the seller's promise to deliver title to the property.
In a unilateral contract, only one party to the contract makes a promise. A typical example is the
reward contract: A promises to pay a reward to B if B finds A's dog. B is not obliged to find A's
dog, but A is obliged to pay the reward to B if B finds the dog. In this example, the finding of the
dog is a condition precedent to A's obligation to pay.
An offer of a unilateral contract may often be made to many people (or 'to the world') by means
of an advertisement. In that situation, acceptance will only occur on satisfaction of the condition
(such as the finding of the offeror's dog). If the condition is something that only one party can
perform, both the offeror and offeree are protected – the offeror is protected because he will only
ever be contractually obliged to one of the many offerees; and the offeree is protected, because if
she does perform the condition, the offeror will be contractually obliged to pay her.
A common type of unilateral contract is the offer of a reward, eg, 'Dog Lost, Answers to Bad
Wolf, £50 reward for safe return'. This is unilateral because although the offeror commits to
paying £50 if the dog is safely returned, nobody is actually contractually committed to finding
and returning the dog.
Courts generally favour bilateral contracts. The general rule in the United States is: "In case of
doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform
what the offer requests or by rendering the performance, as the offeree chooses." Restatement
(Second) of Contracts § 32 (1981) (emphasis added). Here the law attempts to provide some
protection from the risk of revocation in a unilateral contract to the offeree. Note that if the offer
specifically requests performance rather than a promise, a unilateral contract will exist. See
option contracts for more information on protection given to the offeree in a unilateral contract.
Consideration
Making a contract involves an exchange of something of value to each party. Most often, one
person pays money to another, and in return gains a benefit, such as goods or services. Whatever
is given (or paid) is called consideration.