Fundamentals of Contract/Business Law Complete Note for BBS TU
Meaning,
Nature and Functions of Contract
Answer to the questions of Chapter-3
For the most part, the contract is an understanding between at least two gatherings to do or not to accomplish something. An agreement is the premise of businesses or parties. It is a legitimate understanding made by a trade of guarantee between two gatherings.
The agreement is a result of
shared managing of at any rate two people/parties. So as to manage any dealings
between the gatherings they go into an understanding and they play out their
commitments properly. On the off chance that such an understanding is
enforceable or perceived by law, it turns into an agreement.
Hence, the understanding between at any rate
two gatherings to do or not to accomplish something is lawfully enforceable
then it is called a contract. It ties the gatherings or makes lawful commitments
to perform or to satisfy the guarantees made by them.
 |
BBS 3rd Year BUSINESS LAW Complete Notes | BBS Notes |
In particular, legitimate
agreement incorporates two things; Agreement of at any two gatherings/persons
and Legally enforceable. So, Contract= Agreement + Legal enforceability.
Subsequently, to be an agreement, the privilege and commitments must appear from
the understanding and it ought to be lawfully enforceable.
The understanding
which isn't legitimately enforceable isn't an agreement and the commitment
which isn't the aftereffect of the understanding isn't the piece of the agreement. The contract gives the right to one party and casts corresponding duty to another
party.
According to the Section
504(1) of Civil Code, 2074, “If an agreement enforceable by law is made
between two or more persons to do or abstain from doing any act, a contract
shall be deemed to be made.”
S.J. Salmond, - “Contract
is an agreement creating and defining obligations between the parties.”
David M. Walker, - “A contract is an agreement between two or more persons indented to create a legal
obligation between them and to be legally enforceable”.
According to the Indian Contract Act, 1872 Sec. 2(h), “An agreement enforceable by law is a
contract”.
Section 1 of the American Restatement of Contract Act defines a contract as “An
agreement (promise) for the breach of which the law gives a remedy.”
A contract, therefore, is
ab agreement the object of which is to create a legal obligation i.e., a duty
enforceable by law. From the above definition, we find that a contract
essentially consists of two elements: (1) An agreement, and (2) Legal
obligation i.e., a duty enforceable by law.
For example, A promises
to deliver B100 liters of curd for Rs.5000 on a particular date, but fails to
deliver on that date, or if B fails to make the payment on that day, the aggrieved party can take action against each other for remedy.
So, a contract is the fusion of an agreement and enforceability of the agreement and where the parties
make a binding contract, they create rights and obligations between themselves.
The contractual rights and obligations are as a nail and skin of a figure because
one’s right is the other’s obligation and one’s obligation is the other’s
right.
Nature/Feature/Characteristics of Contract
An agreement enforceable
by law is a contract. It has some specific natures, which can be mentioned as
below:
Parties autonomous
The parties to the contract are considered to be autonomous to make a contract on any matter not being contrary to the law. They are free to determine their rights and obligations in the contract as they intend. Generally, the law can also not restrict the freedom of the parties.
The parties to the contract are considered to be autonomous to make a contract on any matter not being contrary to the law. They are free to determine their rights and obligations in the contract as they intend. Generally, the law can also not restrict the freedom of the parties.
Promise co-related
with an obligation
The parties to the contract promise to so or not to do something. Such a promise creates obligations between the parties themselves. So, both promise and obligation accept their existence. In this situation, the parties to the contract are bound to perform their obligation. In general parties to a contract cannot assign their liabilities to one who is not the party to the contract.
The parties to the contract promise to so or not to do something. Such a promise creates obligations between the parties themselves. So, both promise and obligation accept their existence. In this situation, the parties to the contract are bound to perform their obligation. In general parties to a contract cannot assign their liabilities to one who is not the party to the contract.
Civil nature
The contract has common nature as it makes provisions for rights and duties to the concerned parties. It is concerned with the property and position and on account of rupture, the abused party has the right to remuneration. There is no doubt of the penalty as criminal law.
The contract has common nature as it makes provisions for rights and duties to the concerned parties. It is concerned with the property and position and on account of rupture, the abused party has the right to remuneration. There is no doubt of the penalty as criminal law.
Social and
business nature
As Contracts are concerning with social and business matters and similarly significant in both parts, direct the social practices like court marriage and so forth and it is in this way social and business in nature.
As Contracts are concerning with social and business matters and similarly significant in both parts, direct the social practices like court marriage and so forth and it is in this way social and business in nature.
Facilitator
Contract functions as the facilitator while individuals are taking part in their exchanges and practices. It characterizes the specific conditions for the execution of the agreement to parties. It has contributed essentially to the advancement of business exercises in societies.
Contract functions as the facilitator while individuals are taking part in their exchanges and practices. It characterizes the specific conditions for the execution of the agreement to parties. It has contributed essentially to the advancement of business exercises in societies.
Restricted/limited
The concerned parties are in every case lawfully at risk to satisfy their duties and obligations in fair treatment as they have not to option to force any duties to the outsider who is not part of the contract. So also, contracting parties are likewise not permitted to perform commitments more than determined in contract; along these lines, the contract is constrained uniquely to the relating parties only.
The concerned parties are in every case lawfully at risk to satisfy their duties and obligations in fair treatment as they have not to option to force any duties to the outsider who is not part of the contract. So also, contracting parties are likewise not permitted to perform commitments more than determined in contract; along these lines, the contract is constrained uniquely to the relating parties only.
Promise and
obligation
The contract is constructed with the meeting of minds and promises. Promise forms the agreement it’s legitimate enforceability is perceived as a contract. It forces the commitments to the gatherings or parties. Henceforth, the contract is constantly identified with guarantees and commitments or promises and obligations.
The contract is constructed with the meeting of minds and promises. Promise forms the agreement it’s legitimate enforceability is perceived as a contract. It forces the commitments to the gatherings or parties. Henceforth, the contract is constantly identified with guarantees and commitments or promises and obligations.
Two parties
A contract is an understanding between at least two or more than two parties or gatherings. A single party can't go into an agreement. That is the reason there must be in any event two gatherings to make an agreement and thereby contract.
A contract is an understanding between at least two or more than two parties or gatherings. A single party can't go into an agreement. That is the reason there must be in any event two gatherings to make an agreement and thereby contract.
Sanctity of contract
The common law framework shields contract from extortion, deception, mistake, coercion, and undue influences. In this way, to be enforceable an agreement is guarded against blemished and undesirable components like incompetent parties, coercion, the undue process of offer and acceptance, etc.
The common law framework shields contract from extortion, deception, mistake, coercion, and undue influences. In this way, to be enforceable an agreement is guarded against blemished and undesirable components like incompetent parties, coercion, the undue process of offer and acceptance, etc.
Application of the law of
contract: A contract being enforceable by law, involves all terms and
conditions which are deemed to have agreed upon by the parties to it expressly
or impliedly. In the course of the performance of the contract, if any problem
arises between the parties, the law of contract comes into existence and helps then
resolve such problems.
Functions/Roles/Jobs/Duties of Contract
Contract forms rights,
obligations and commitments to the regarded parties and are upheld by law, so the contract is implying for accomplishing the motivations behind the gatherings. The contract has a significant capacity of making sure about the desires made by the promise of
future execution are satisfied or that remuneration will be paid for its
encroachment. Following are the significant jobs or functions of a contract;
Constitutive function
Contract encourages forward arranging of the rights and obligations created from the legal agreement and makes arrangements for future possibilities. So, it can construct several business dealings between the parties.
Contract encourages forward arranging of the rights and obligations created from the legal agreement and makes arrangements for future possibilities. So, it can construct several business dealings between the parties.
Duty function
It builds up the duties of the concerned parties and standard of execution not out of the ordinary from them. Therefore, the contract creates a certain standard of function and fulfilling the duties and obligations created by the agreement and makes all the relating parties responsible for their promises.
It builds up the duties of the concerned parties and standard of execution not out of the ordinary from them. Therefore, the contract creates a certain standard of function and fulfilling the duties and obligations created by the agreement and makes all the relating parties responsible for their promises.
Hazard bearing capacity/function
It empowers to hold up under financial hazard engaged with the exchanges to be apportioned ahead of time between the concerned parties. It means contract minimizes the risk of the business transactions that could emerge in different phases and times.
Healing/remedial
capacity
The contract makes arrangements for cure if things turn out badly, for example, to give installment ahead of time or to end the agreement by the party who isn't in default.
The contract makes arrangements for cure if things turn out badly, for example, to give installment ahead of time or to end the agreement by the party who isn't in default.
Reconciliations work
A contract is an instrument that may accommodate and bring the related parties to a shared objective, who has a discrete and clashing interest.
A contract is an instrument that may accommodate and bring the related parties to a shared objective, who has a discrete and clashing interest.
From all the above
discussion, it appears clear that a contract is a valid and legal agreement or the promise which can be enforced by the court of law in the event of its breach. The contract itself is the law creating the guidelines and frameworks for concerning the party
to perform and fulfill their tasks which are assigned as per their own
autonomous understanding within the legal criterion of the nation. It is always
concluded between two or more competent persons upon a consideration to do or to
abstain from doing some acts and make aware of rights and duties to its
parties.
For answers to other questions from some chapters, click HERE
