Valids and Essentials of a Proper Contract

WHAT IS A CONTRACT.

A contract is any agreement enforceable by law. As defined by Pollock every agreement and promise enforceable at law is a contract.

 Agreement may be defined as every promise and every set of promises forming consideration for each other.

When the person to whom the proposal is made signifies his assent there to the proposal is said to be accepted. WHEN A PROPOSAL IS ACCEPTED IT BECOMES A PROMISE.

THUS ANY CONTRACT IS AN ADMIXTURE OF AGREEMENT AND ITS ENFORCEABILITY.

Agreement on the other hand is an admixture of OFFER AND ACCEPTENCE. As the agreement are set of promises forming consideration for each other. It will need any party to make n offer and the other to accept it. Then the proposal becomes a promise.

 CONTRACT = OFFER + ACCEPTENCE + ENFOPRCEABILITY.

The law of contract is that branch of law that determines the circumstances in which promises made by parties shall be binding on them. There are two types of agreements:

      One that are made with an intention that they will be legally binding on the peers.

      Others are those which are not made with such intentions.

Both the agreements contain offers and acceptances but the enforceability is not present as there was no intention on the part of the peers that can possibly give rise to legal obligations. The three major cases that prove the fact are as follows:

*      Balfour V. Balfour

In this case a husband promised his wife in England that he will provide her with an allowance of 30 pounds before leaving for cylone. After some times the parties separated. The wife sued for allowance. It was held that there was no intention on the part of the parties to sue each other in court of law.

*      Rose & franck Co V.Crompton Bros.

In this case the former was appointed as an agent of the latter. One clause in the agreement was as follows, This agreement is not entered into as a formal or legal agreement and shall not be a subject to legal jurisdiction. It was held that the contract was not binding as the parties were at consensus in relation to the clause that the agreement is not enforceable.

*      Jones V. Vernons Pools. Ltd

In this case the agreement contained a condition, that it shall not be attended by or give rise to any legal relationship Held that the contract was not valid.

Justification: In all of the above cases the enforceability of the agreement was absent. Enforceability can be taken away either by expressed means or by prevailing circumstances as in the case of Balfour V. Balfour there was  no expressed agreement that it was not enforceable. But the prevailing circumstances justified the fact that they never wanted to sue each other as they never knew they will get separated. For example, if a father told his son that he will buy him new motor car. He is under no obligation to fulfill any such promises.

Another important thing is consensus ad idem. As was held in the renowned case of Sunnam Sattiah V State, agreement as defined in section 2(e) is essentially and exclusively consensual in nature. So the minds of the parties to a contract must meet in full and final agreement in relation to the subject matter of the agreement. If A told B that he wants to buy a car from B, B thought it was the red car he was talking about but A was indeed talking about the blue car. Hence there is no contract.

Another important point is the certainty of the agreement. The agreement must not be vague. This was proved in the case of scammel V. Ouston. In this case ouston agreed to purchased a motor car from Scammel on hire purchase basis but the agreement gave no indication about important points relating to hire purchase like the rate if interest, period of completion of the agreement etc. The vagueness of the agreement rendered it void. Another case was Montreal gas co V Vasey in which a company agreed that on expiration of the contract it would consider for renewal of the contract. It was held that the company is under no responsibility to fulfill the promise as there was no intention.

The contract must have a lawful consideration and a lawful object. The consideration means something in return. The underlying principle is quid pro quid. This law was made keeping in mind that the agreements made without consideration are generally bogus the reason why the law enforces only those promises which are made for consideration is that gracious or voluntary promises are often made rashly and without due deliberation. It is against general prudence that a commercial contract is without consideration. It raises doubts S in context of the intention of the parties to make the contract legally enforceable. It must be mentioned that gifts are not covered under this. There must be some consideration which is legally valuable though it is not an adequate consideration. The law is not responsible for bad bargains. A person making an promise to not revoke an offer that is not supported by a consideration is under no responsibility to keep that offer open (Sharad Trading Co V State).

In the case of Curie V Misa, the justice Lush defined consideration as follows. a valuable consideration in the sense of law may consists either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by other.

 Pollock defined the consideration as the price for which the promise of other is bought.

Justice Peterson in the case of Thomas V Thomas gave the following definition, Something which is of some value in the eyes of law .it may be some benefit to the plaintiff or detriment to the defendant. An agreement without consideration is effected by the principal of EX NUNDO PACTO NON ORITUR ACTIO. An agreement without a consideration subject to certain exceptions is a void agreement.

The consideration must also be lawful. Thus an unlawful consideration renders an agreement void.

A lawful object is also necessary. OBJECT means the DESIRED RESULT THAT ONE WANTS FROM THE END OF AN ACTIVITY.

This must be lawful.

Another important fact is that the promise must be possible to perform. Possibility of performance is necessary for the agreement to be enforceable. As was given in the case of HALL V CAZENOVE a ship was told to be sailing on a day which already expired. This rendered it the agreement impossible and void. Another important case is the case of HARVEY V. GIBBSON where Harvey paid a sum to gibbsons servant who promised to discharge him from his dues. This is legally impossible, as the servant cannot discharge Harvey.

Another important case is the case of COLLINS V GODFROE. Here a person promised another person to pay him a sum if he appears in court to testify. The agreement is void as there is no consideration as the consideration is already his duty.

The parties must agree to the same thing in the same sense. The consent of the parties must be free. The consent is not free if it is mutilated by:

*      Coercion

*      Undue influence

*      Misrepresentation

*      Fraud

*      Mistake

These except mistake render the agreement voidable and the mistake renders the agreement void. As was given in the case of CHIKHAM AMIRAJU V SHESHAMMA where a person forced another person to enter into an agreement or else he will commit suicide was held void. As committing suicide or an attempt to commit suicide is a crime under the Indian penal code. So he is said to use coercion. The same thing happened in purabi banerjee v basudev mukherjee.

Capacity of parties is also an important issue. The following people cannot enter into a contract:

*      Minor

A minor by law is still not able to take rational decisions. So he is not able to enter into an agreement (mohair biwi v dharamdas ghos). But he can be a beneficiary. This was held in the case of shrafat ali v noor mohammad.

*      Person of unsound mind.

*      Convict.

*      Foreign sovereign.

*      Insolvents.

 AKASH KAPOOR.