Business Law
1. What is a Contract? Classify the types of contracts with suitable examples.
Ans. A contract is an agreement reached between two or more persons involving the exchange of some goods or services .There are some key requirements for the establishment of a contract: * An offer & an acceptance * ‘Capacity or the ability to understand the consequences of a contract by persons of such age prescribed by law & those with sound mind. * ‘Mutual consent’ or agreement on the terms of a contract ‘consideration’, or reward for goods or services rendered. The element that distinguishes a contract from casual agreements is that it is legally binding: The law provides a remedy in the event that the promise is broken. Legally, certain types of contracts should be in writing, while oral contracts are also legally binding in many situations. An oral contract can occur even if not all the terms of a contract are present in the agreement.
A contract may be created in the following ways: * Orally: Example: X makes a phone call to Y & offers to sell his bike. Y accepts X’s proposal & communicates to X his intension to buy the bike, during the same phone call. * In writing: (including by electronic mean or though a website) a contract for sale of immovable property must be in writing, stamped & registered. Contracts, which need registration, or bill of exchange or Promissory Note, must be in writing. Other circumstances when promises to pay a time barred loan, & when a contract is entered into as per the Limitation Act without consideration of natural love & affection.
Example: A proposes, by letter to sell a house to B at a certain price. B accepts A’s proposal by a letter sent by post.
Types of contracts
On the basis of validity:
1. Valid contract: An agreement which has all the essential elements of a contract is called a valid contract. A valid contract can be enforced by law.
2. Void contract & Voidable contract: A
Ans. A contract is an agreement reached between two or more persons involving the exchange of some goods or services .There are some key requirements for the establishment of a contract: * An offer & an acceptance * ‘Capacity or the ability to understand the consequences of a contract by persons of such age prescribed by law & those with sound mind. * ‘Mutual consent’ or agreement on the terms of a contract ‘consideration’, or reward for goods or services rendered. The element that distinguishes a contract from casual agreements is that it is legally binding: The law provides a remedy in the event that the promise is broken. Legally, certain types of contracts should be in writing, while oral contracts are also legally binding in many situations. An oral contract can occur even if not all the terms of a contract are present in the agreement.
A contract may be created in the following ways: * Orally: Example: X makes a phone call to Y & offers to sell his bike. Y accepts X’s proposal & communicates to X his intension to buy the bike, during the same phone call. * In writing: (including by electronic mean or though a website) a contract for sale of immovable property must be in writing, stamped & registered. Contracts, which need registration, or bill of exchange or Promissory Note, must be in writing. Other circumstances when promises to pay a time barred loan, & when a contract is entered into as per the Limitation Act without consideration of natural love & affection.
Example: A proposes, by letter to sell a house to B at a certain price. B accepts A’s proposal by a letter sent by post.
Types of contracts
On the basis of validity:
1. Valid contract: An agreement which has all the essential elements of a contract is called a valid contract. A valid contract can be enforced by law.
2. Void contract & Voidable contract: A