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BUSINESS REGULATORY FRAMEWORKMODULE 1
2 MARK QUESTIONS
1. Contract
A valid contract is an agreement, which is binding and enforceable. In
valid contract all the parties are legally bound to perform the contract.
According to Section 2 (h) of the Contract Act, “an agreement
enforceable by law is a contract.”
2. Void contract
A Contract which is not enforceable in a court of law is called Void
Contract. Example: there is a Contract between X and Y where Y is a
minor who has no capacity to contract. It is Void Contract.
3. Unenforceable contract
A contract which has not properly fulfilled legal formalities is called
unenforceable contract. That means unenforceable contract suffers from
some technical defect like insufficient stamp etc.
4. Express Contract
A contract is said to be an express contract, if the terms of a contract are
expressly agreed upon between the parties (either by words spoken or written)
at the time of formation of the contract. An express promise results in express
contract. A promise is said to be an express promise, when the offer or
acceptance of any promise is made in words.
5. Implied Contract
An implied contract is one for which the proposal or acceptance is made
otherwise than in words.
Implied contracts are inferred from the circumstances of the case and conduct of
the parties.
For example, when A takes a cup of milk in a hotel, there is an implied contract.
6. Quasi – Contract
A quasi-contract is one, which is created by law. In the quasi-contract, there is
no intention on either side to make a contract. In a quasi-contract, rights and
obligations arise not by an agreement but by operations of law.
For example, where certain letters are delivered to a wrong addressee, the
addressee is under an obligation to return the letters.
, 7. Unilateral Contract
It is also called as one-sided contract. In a unilateral contract, only one party has
to satisfy his obligation at the time of the formation of it, the other party having
fulfilled his obligation at the time of the contract or before the contract comes
into existence.
A typical example is an offer for a reward. A promise to reward any person who
finds his missing dog. In this case no obligation to anyone. If B finds it A will
be obliged to pay the reward
8. Bilateral Contract
A contract is said to be a bilateral contract where the obligations of both the
parties to the contract are pending at the time of formation of the contract. In
this type of contract, a promise on one side is exchanged for a promise on the
other
For example, A promises to stitch a blouse and B promises to pay Rs.30. Here
A promises to stitch the blouse and B promises to pay. Thus, each party is both
a promisor and a promisee.
9. Acceptance: Giving consent to the offer.
10. Counter Offer: A conditional acceptance or a fresh offer instead of
accepting the original offer.
11. Cross Offer: Similar offers made by two parties to each other without
knowing about the offer made by the other party. It does not amount to
acceptance.
12. Express Offer: An offer made expressly by words spoken or written.
13. General Offer: Offer made to the world at large.
14. Implied Offer: An offer inferred from the conduct of the party or the
circumstances of the case. Invitation to Offer: Offer invited from others
by giving an ad, quotations, or price list, etc.
15. Offer: Expression of a proposal to do or its abstaining from doing
something with a view to obtain the consent of the offeree.
16. Revocation: Taking back or cancelling an offer or the acceptance.
17. Specific Offer: Offer made to a definite person.
18. Standing Offer: A continuous offer in the form a tender.
19. Offer and Acceptance
Section2 (a) defines the term 'proposal' as follows: "When one person
signifies to another his willingness to do or to abstain from doing anything,
with a view to obtaining the assent of that other to such act or abstinence, he
is said t.0 make a proposal."
,The person making the offer is called the 'offered' or the 'promisor' and the
person to whom it is made is called the 'offeree'. When the offeree accepts
the offer, he is called the 'acceptor' or the 'promise'. For example, Ram offers
to sell his scooter to Prem for Rs. 10,000 This is an offer by Ram. He is the
offeror or the promisor. Prem to whom the offer has been made is the offeree
and if he agrees to buy the scooter for Rs. 10,000 he becomes the acceptor or
the promisee.
20. Cross offer
Two offers which are similar in all respects, made by two parties to each
other, in ignorance of each other's offer are known as 'cross offers". Cross
offers do not amount to acceptance of one's offer by the other and as such
no contract is concluded. For example, A of Delhi, by a letter offers to
sell his house to B of Bombay for Rs. 10 lakh. At the same time, B of
Bombay also makes an offer to A to buy A's house for Rs. 10 lakhs
21. Acceptance
Section 2(b) of the Indian Contract Act defines the term 'acceptance' as
"when the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal when accepted
becomes a promise. " For example, A offers to sell his book to B for Rs.
20. B agrees to buy the book for Rs. 20. This is an acceptance of A's offer
by B.
22. Consideration
‘Consideration’ means “something in return”, . Consideration is an
essential component of a valid contract. Consideration is the price
for the contract. An agreement without consideration is void and
thus not enforceable by law except under certain circumstances.
According to Sir Frederick Pollock. Consideration is the price for
which the promise of the other is bought, and the promise thus given
for value is enforceable.”
23. Privity of Contract or stranger to contract
Only the parties of the suit are bound by the terms and conditions
as well as by the consequences of the contract. A stranger to
contract, cannot file a suit to enforce any of the right or liability
arising out of the contract
24. Privity of Consideration or stranger to consideration
Privity of Consideration means that although the party is stranger to
consideration as he or she has not paid the consideration, but
someone has paid consideration for the benefit of the beneficiary.
So, the beneficiary may file a suit to execute the contract.
25. promisor. A promisor is the party who makes the promise.
, 26. promisee. A promisee is the party to whom a promise is made.
27. Pastconsideration:
Past consideration is a promise for a voluntary act done in the past
to help the party who is making promise to pay or to do something
subsequently
28. Present consideration
When the promisor receives consideration simultaneously with his
promise, the consideration is termed as Present Consideration.
29. Undue Influence
A contract is said to be induced by ‘undue influence’ where the relations
subsisting between the parties are such that one of the parties is in a position to
dominate the will of the other and uses that position to obtain an unfair
advantage over the other.
30. Coercion
Coercion is defined in section as follows. Coercion is the committing or
threatening to commit any act forbidden by the Indian Penal Code, or the
unlawful detaining or threatening to detain, any property to the prejudice of any
person whatever with the intention of causing any person to enter into an
agreement.
31. Mistake
Mistake may be defined as an erroneous belief about something mistake usually
has serious consequence in a contract. The area of mistake is divided into two
categories. (i) Mistake of law, and (ii) mistake of fact.
32. Misrepresentation
Misrepresentation is a false statement which the person making it honestly
believes to be true or which he does not know to be false. It also includes non-
disclosure of a material fact or facts without any intent to deceive the other
party.
33. Bilateral mistake
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