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9 Cards in this Set
- Front
- Back
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Contract |
According to section 2 of the contract act 1872
An agreement enforceable by the law is called a Contract. On analysing this definition of a contract, It appears that a contract must have the following two elements: a) An agreement and b) Enforceability of an agreement |
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Agreement |
A promise or a set of promises forming the consideration for each other is called an agreement. e.g. X offers to sell his car to Y. Y accepts this offer. This offer after acceptance becomes a promise and this promise is treated as an agreement between X and Y. |
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Enforceability of an agreement |
An agreement is said to be enforceable by law if it creates some legal obligations. In other words. The parties to an agreement must be bound to perform their promises and incase of default by either of them, must intend to sue. e.g. X invites his friend Y to dinner and Y accepts the invitation. If Y fails to turn up for dinner, X cannot go to the court to claim his loss. |
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Valid Contract |
A valid contract is a written or expressed agreement between two parties to provide a product or service. There are essentially six elements of a contract that make it a legal and binding document. In order for a contract to be enforceable, it must contain: An offer that specifically details exactly what will be provided Acceptance, or the agreement by the other party to the offer presented Consideration, or the money or something of interest being exchanged between the parties Capacity of the parties in terms of age and mental ability Intent of both parties to carry out their promise Object of a contract is legal and not against public policy or in violation of law
In other words, a contract is enforceable when both parties agree to something, back the promise up with money or something of value, both are in sound mind and intend to carry out their promise and what they promise to do is within the law. |
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Void contract |
A void contract is not a contract and has no effect in a court of law and cannot be enforced in a court of law. Most commonly, a void contract will be missing one or all of the essential elements needed for a valid contract. Neither party needs to take action to terminate it, since it was never a contract to begin with. Example A contract that was between an illegal drug dealer and an illegal drug supplier to purchase a specified amount of drugs for a specified amount. Either one of the parties could void the contract since there is no lawful objective and hence missing one of the elements of a valid contract. |
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Voidable Contract |
A voidable contract is a contract which may appear to be valid and has all of the necessary elements to be enforceable, but has some type of flaw which could cause one or both of the parties to void the contract. The contract is legally binding, but could become void. If there is an injured party involved, the injured party or the defrauded must take action, otherwise the contract is considered valid.ExampleA contract entered into with a minor could be voidable. |
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Unenforceable contract |
An unenforceable contract is a contract which cannot be enforced in a court of law. This could happen because the terms of the contract are ambiguous, if one party has a voidable contract or if the Statute of Limitations has expired. The statute of limitations requires that lawsuits be filed within a certain period of time following a breach.
Example #1 Bill bought a property from Harry through a written contract for sale. Seven years after the purchase Harry wanted to claim that the contract was unenforceable. The statute of limitations for written contracts in Oregon is six years and Harry would not be able to challenge the contract. |
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Illegal contract |
An illegal agreement, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. The illegal end must result from performance of the contract itself. The classic example of such an agreement is a contract for murder. |
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Essentials |
Elements of a Contract. The requisite elements that must be established to demonstrate the formation of a legally binding contract are (1) offer; (2) acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, in certain circumstances, (6) a written instrument |
