Contract & Claims

7/28/2019 Contract & Claims

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ContractWhat is a contract?


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Important Points

Legally binding

Legally enforceable

Remedies

Simple contracts Deed

Conveyances of land

Bill of exchange Valid, void, voidable and unenforceable

contracts


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Law

Law can be divided into differentcategories

Some of those categories are private law v. public law

civil law v. criminal law


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Law

Private Law deals with therelationships between ordinary

people in everyday transactions That includes you and me, as well

as businesses and companies

Private Law includes the law ofcontract and the law of tort


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Law

In this category, civil law dealswith the relationships between

individual citizens Its purpose is to settle arguments

between individuals

It helps people to find remedies it doesnt really punish people

Civil Law includes all Private Law

so it includes the Law of Contract


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What is a contract? Examples

I promise to bring chocolates to the wholeclass. Is there a contract?

I promise to give you INR 100 if ride your

bike to Band Stand and back to College inless than 2 hours. Is there a contract?

I give you INR 20 for your Coca-Cola. Isthere a contract?

I promise to give you a new bicycle if youagree not to smoke for one year. Is therea contract?


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Definition of a contract

A legally binding agreement

that means there must be some kind of

agreement between two parties However, not all agreements are

contracts because not all agreementsare legally enforceable

legally enforceable means that acourt will say that an agreement is acontract


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Definition of a contract (cont.)

To decide if an agreement islegally enforceable as a contract, a

court will apply the rules andprinciples of the law of contract

Therefore, knowing a little about

these rules can help businesspeople to create valid contracts


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Simple Contracts

There is no general rule in Englishlaw that a contract must be in

writing In fact, in many situations people

do not realise that they are makinga contract

Some contract can be madeverbally or by actions

These are Parol (simple) contracts


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Simple Contracts (cont.)

Although there is no requirementfor a simple contract to be in

writing, sometimes the partiesmight record the contract inwriting

This can be useful later if there is

disagreement about the contract If the contract is important or

involves a lot of money it might be

wise to put it in writing


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Deeds

Deeds are kind of contract whichmust always be in writing

Conveyances of land: this is thelegal process of transferring theownership of land from one partyto another

This is different from theagreement to sell the land

The conveyance follows the

agreement to sell


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Contracts which must be in

Writing

Some contracts must be in writingbut they dont have to be by deed

Most of these requirements comefrom Statute

Some examples

bills of exchange contracts for the sale of land


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Bill of Exchange

Written order used primarily ininternational trade thatbinds one party to pay a fixed sum of

money to another party at apredetermined.


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Legal Effect

As mentioned earlier, contracts areagreements, but not all agreements arelegally enforceable contracts

In fact, the legal effect of agreementsfall into 4 categories

Valid contracts

Void contracts

Voidable contracts

Unenforceable contracts


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Valid Contracts

These are agreements which arecompletely binding and

enforceable Parties to valid contracts gain

rights and responsibilities

The courts will make sure that theparties follow these rights andresponsibilities if there is any

argument


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Essentials of a Valid Contract

Offer and acceptance

Intention to create legal relations

Requirement of written formalities in some

cases

Parties must have capacity to contract

Actual consent by the parties to the terms

of the contract Contract must not be against public policy


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Void Contracts

In fact, these are not contracts at all

They have no legal effect

There are a number of things which canmake a contract void

e.g. mistake, illegality

The important thing to remember isthat you cannot enforce a void contract


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Void Contracts - Example

Daniel gives his students somuch homework that they

decide to kill him

They pay a supari to hitmanINR 150000 to kill Daniel


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Void Contracts Example

(cont.)

However, the hitman simplyspends all the money in bars and

then goes home He does not kill Daniel

The students cannot claim their

money back because it is illegal tohire a hitman to kill someone.


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Voidable Contracts

This kind of contract is valid unlessone of the parties has it set aside

(i.e. declared void) This could happen where one party

is tricked into entering a contract

by the other party


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Voidable Contracts - Example

Daniel pays for a holiday in Panchganibecause the travel service shows himpictures of a lovely 5 star hotel.

However, when he arrives, Daniel findsthat the hotel is still being constructed.

There is a room where he can stay, but

not all the facilities are available andthe hotel certainly doesnt look like thepictures


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Voidable Contracts Example

(cont.)

Assuming that the travel company knewabout the hotel, then they have made amisrepresentation to Daniel which made

him enter into the contract for theholiday

Daniel could now choose to set asidethe contract

However, he could decide that thingsare not to bad and that he can still havea good holiday


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Voidable Contracts Example

(cont.)

So the contract is notautomatically void (like with the

hitman), it is voidable at Danielschoice


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Unenforceable Contracts

These are agreements which arelegal but which cannot be enforced

in court for some reason For example, a time limit for

enforcing the contract may have

expired


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Why have a Law of Contract?

As we saw from the examples,contracts arise in simple, everyday

situations Modern society operates by people

and companies exchanging goods

and services The Law of Contract helps to give

a structure to this


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Why have a Law of Contract?

The Law of Contract is part of PrivateLaw so it is concerned with relationshipsbetween parties

It helps us to decide what is a validcontract

The Law of Contract is also part of Civil

Law so it is also concerned withremedies

It helps us the other party to a contract

does not keep to the agreement


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Summary

a contract is a legally bindingagreement

simple contracts do not have tobe in writing

the legal effect of contracts fallinto 4 categories: Valid contracts

Void contracts

Voidable contracts

Unenforceable contracts


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Summary (cont.)

Business is an important part ofmodern society

The Law of Contract tells us whatis necessary to make a validcontract

It also gives us remedies whereanother person does not follow theterms of the contract


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MCQs

Which of the following relationshipsmust exist between the parties inorder that a contract is enforceable?

a. Social relationship.

b. Moral relationship.

c. Legal relationship

d. Casual relationship.

e. None of the above.


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MCQs

A accepts B telephonic invitationfor dinner. This is

a. A valid contract.

b. A invalid contract.

c. A voidable contract.

d. A void contract.e. Not a contract


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MCQs

A contract wholly performed by oneof the parties is called as:

a. Unilateral contract

b. Bilateral contract.

c. Executed contract.

d. Executory contract.e. Quasi- contract.


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MCQs

A,B and C enter into an agreementto divide among themselves all thegains acquired or to be acquired in

future by fraud. Is it a validagreement?

a. Yes, as all of them agreed to share

the gains.b. No, as the object is unlawful and

fraudulent


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MCQs

c. Yes, as they are using their skill togain something.

d. Yes, as all the essentials are present

in the contract.



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MCQs

Anish aged 17 years, borrowed moneyfrom a money lender representing himselfto be a 21 years old. Identify legalconsequence:

a. Anish can be sued for fraud.

b. Anish can not be sued for fraud

c. Anish is liable to repay the amount.

d. Guardian of Anish is liable to repay theamount.

e. Both a & c above.


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MCQs

General insurance is a .

a. Voidable Contract.

b. Wager.c. Contract of Guarantee.

d. Contract of Indemnity



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MCQs

Which of the following is an exampleof the contract of indemnity?

a. Contract of Life insurance.

b. Contract of General Insurance

c. Contract of service.

d. general Lien.e. None of the above.


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MCQs

Which of the following is a contract ofbailment?

a. Property deposited with the court inpursuance of its order.

b. Deposit of money in a bank.c. Agreement between a retailer and theGovernment for distribution og foodthrough a fair price shop.

d. Goods dispatched on consignment basise. Loan given by a bank to one of itscustomers.


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MCQs

Who among the following enjoys theright of subrogation in a contract ofindemnity?

a. Creditor.

b. Principal debtor.

c. Indemnifier

d. Indemnified.

e. Both a and b above.


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MCQs

The bailment of goods as security forpayment of a debt is:

a. Lien.

b. Mortgage.

c. Hypothecation.

d. Pledgee. Assignment.


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MCQs

A contract is said to have been dischargedby operation of law on ---

a. Performance of the contract by both theparties.

b. Mutual consent of both the parties.

c. Lapse of time in performance of thecontract.

d. Insolvency of either of the partiese. Breach of contract by either of theparties.


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MCQs

A agreed to sell his car to B, atgun point. This contract is void as itinvolves ---------

a. Undue influence.

b. Compulsion.

c. Coercion

d. Defamation.


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