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Business Environment and Law-Law Of Contract (Indian Contract Act 1872)

Invalidating Causes-Law Of Contract

   Posted On :  06.05.2018 11:37 pm

In the following circumstances an agreement is void ab initio.

Invalidating Causes
In the following circumstances an agreement is void ab initio.
           If a party to the contract is incompetent to contract (Sec.10, 11 & 12)
            If the agreement is without consideration (Sec. 10, 25) barring certain exceptions.
            If the consideration or object is unlawful (Sec. 23)
            If the meaning of the contract is uncertain (Sec. 29)
            If the agreement is to do an impossible act (Sec. 56)
            If both the parties enter into an agreement under a mistake as to the essential matter of fact (Sec. 20). There is no consensus ad idem.
            If both the parties are under a mistake as to foreign law (Sec. 21)
       If the agreement is in restraint of marriage of a person other than a minor (Sec. 26)
            If the agreement is in restraint of trade (Sec. 27) barring certain exceptions.
            If the agreements is in restraint of legal proceedings (Sec. 28)
            If the agreement is by way of wager (Sec. 30)

Illegal Agreement: An illegal agreement is one which is forbidden by law i.e. it is entered into with the intention of violating the law. Example: A agrees to steal furniture for B for a consideration of Rs. 1, 00,000. It is illegal and therefore it is void. It also attracts the penal provisions of the law it is violating.
While all illegal agreements are void, all void agreements are not illegal. Parties to an illegal agreement cannot get any help or protection from law courts.

Unlawful Agreements: (Sec. 23). In simple words an agreement may be unlawful because it is:
Immoral – i.e. contrary to sound and positive morality as recognized by law, e.g. cohabitation.
Opposed Public Policy – i.e. contrary to the welfare of the State as tending to interfere with the civil or judicial administration, or with individual liberty of citizens, e.g. bribing a public servant.

Illegal – i.e. contrary to positive law, being forbidden either by statutes law or common law;
Hence a line of demarcation needs to be drawn between illegal and unlawful agreements.
Unenforceable Contract: Contracts which have all the essentials of enforceability but cannot be enforced due to certain technicalities like insufficiency of stamp, etc. are termed as unenforceable contracts.

Express Contract: It is one where the intention of parties is stated in words either written or spoken. Example: A goes to B’s shop and asks him to supply 10 boxes @ Rs.20per box. B tells him that he is ready to supply the boxes at the mentioned rate. This is an Express Contract. The same intention of the parties may be expressed in writing signed by both the parties.

Implied Contract: The evidence of an implied contract is to be deduced from the acts or conduct of the parties. No exchange of words either written or spoken takes place, but the manifestation of their intentions is inferred from their respective acts or conduct.

Quasi Contracts: These are those obligations which are imposed by the Contract Act and do not arise from a consensus between the parties. Example: A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his own. B is bound to pay A for them; the obligation is imposed by law.

An Executed Contract: It is one where both the parties to a contract have discharged their respective responsibilities by performing them. All transactions of Cash sales are the examples of Executed Contracts.

An Executory Contract: It is one where one or both the parties are yet to perform their respective promises. It is partly Executed and partly Executory.

Unilateral Contract: It is one where at the time when the contract is made one party has already performed his obligation and the obligation on the part of the other party only, is outstanding. Example: A goes to a bus stand ticketcounter and buys a ticket for journey. A has performed his duty under the contract i.e., to pay the scheduled fare. But the bus authority is yet to perform his promise i.e., of carrying him from one point to another. This is a Unilateral Contract.

Bilateral Contract: As against Unilateral Contract, a Bilateral Contract is one where at the time of entering into the contract both the parties to the contract are yet to perform their respective promises.

Tags : Business Environment and Law-Law Of Contract (Indian Contract Act 1872)
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