business law p

8/3/2019 Business Law P

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Business Law


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NATURE

Is that branch of law which is concerned with mercantiletransactions. It deals with contractual situations & the rts. &

obligations arising out of mercantile transactions between

mercantile persons.


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Law of contracts

The stability & security of the business world are dependent on the

law of contracts.

Legally enforceable promises are termed contracts.

The term contract is defined in sec.2(h) of the Indian contract Act

1872 as - An agreement enforceable by law.

Thus for the formation of contract there must be1. An agreement2. Agreement should be enforceable by law

Contract is an agreement ---- is a promise----is an accepted proposal

Agreement = offer + acceptance


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Law of Contract

It is the most imp. Branch of B.law

Affects people engaged in trade where bulk transactionsare based on contracts

Purpose is to ensure the realization of expectation ofparties.

Not possible to plan ahead if no assurance

Where promises are made at one time & performance is

later


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Essentials of a valid contract

1. Offer & acceptance

2. Intention to create legal relationship

3. Lawful consideration

4. Capacity of parties5. Free & genuine consent

6. Lawful Object

7. Agreement is not declared void

8. Certainty & possibility of performance

9. Legal formalities


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Classification of contracts

1. Unilateral & Bilateral

2. Valid, Voidable, Void, Unenforceable

3. Formal, Informal or simple_contract of record_judgement ofcourt

_ Contract under seal

simple contracts also known as parol contracts

4. Executory & Executed

5. Express & Implied


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Offer

A proposal by one party to another to enter intoa legally binding agreement with him .A proposalIs made when he signifies his willingness to do

or not do.

Will u buy my car for 5000

Express, implied, Specific General


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Legal rules of offer

1. Must be such as in law is capable of being accepted &giving rise to legal relationship2. Terms of offer must be definite, unambiguous, certain

and not loose & vague3. Offer must be communicated

4. Offer must be made with a view to obtaining the assent5. Offer should not contain a term, the non compliance of

which may be assumed to lead to acceptance6. statement of price is not an offer7. Offer may be distinguished from A declaration of intention & announcement An invitation to make an offer

A tender is an offer_ definite or standing


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Acceptance

A contract emerges from acceptance.When the offereesignifies his assent to the offeror the offer is accepted.

Offer when accepted is a promise

Is expressed or implied Generally expressed communicated

who Only that particular person can accept.Other wisenot valid


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Legal rules as to acceptance

1. Must be absolute & unqualified: must confirm with theoffer

2. Must be communicated: mental determination notsufficient

3. Must be according to the prescribed mode or usual &reasonable mode

4. Must be given within a reasonable time if not specified

5. Cannot precede an offer.not valid . No contract6. Must show an intention on part of the acceptor to fulfill

terms of the promise

7. Must be given by the party or parties to whom the offer

is made


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Continued

8. Must be given before the offer lapses or before the offeris withdrawn

9. Cannot be implied from silence

Offer & acceptance is complete when communicated.

When we accept & post a letter duly stamped,& it getslost the contract is complete

Rejection of offer-express-notice reaches the offeror-Implied-counter offer&conditional acceptance


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Consideration

Essential element to support a contract. Used in thesense of quid pro quo (something in return)

Sec 2(d): When at the desire of the promisor, thepromisee or any other person has done of abstainedfrom doing or does or abstains from doing or promises todo or to abstain from doing something, such act orabstinence or promise is called a consideration for thepromise.


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Legal rules as to consideration

1It must move at the desire of the promissor

2May move from the promisee or any otherperson even a stranger

3.It may be an act, abstinance,or forbearance or areturn promise : Foll. Are good considerations

a)Forbearance to sue

b)Compromise for a disputed claim

c)Composition with creditors4.It may be past present or future

5. Need not be adequate


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Continued

6. Must be real & not illusory: There is no real considerationin the foll.cases:a) Physical impossibility

b) Legal impossibility

c) Illusory considerationd) Uncertain consideration

7. Must be something the promissor is not bound to do

8 It must not be illegal immoral or opposed to public policy


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Contract without consideration is void

1.Love & affection2.Compensation for voluntary services

3.Promise to pay a time barred debt

4. Completed gift

5.No consideration is necessary to create an agency

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