Basics of Business Law for Academics
Law:
The word ‘law’ is a general term and has different connotations for different people. Lawyer who practices law may think of law as a vocation. A legislator may look at law as something created by him. A judge may think of law as guiding principles to be applied in making decisions.
The word law is often preceded by an adjective to give it more precise meanin e.g., civil law, criminal law, mercantile law, industrial law, international law etc.
Indian Contract Act 1872:
There are 266 sections.
General principles of the law of contract (Secs. 1-75). Sections 76 -123 were repealed by Sale of Goods Act 1930.
Specific kinds of contracts;
Contracts of indemnity and Guarantee (Secs. 124-147)
Contracts of Bailment and Pledge (Secs. 148-181)
Contracts of Agency (Secs. 182-238). Sections 239-266 were repealed by Indian Partnership Act 1932.
Agreement 2(e):
Section 2(e) “every promise and every set of promises, forming the consideration for each other”.
Section 2 (b) defines promise as-“when the person to whom the proposal is made signifies his assent there to, the proposal is said to be accepted.
Proposal when accepted, becomes a promise”.
Thus, an agreement is the result of the proposal made by one party to the other party and that other party gives his acceptance thereto of course for mutual consideration.
Promise = Offer/Proposal + Acceptance
Agreement = Offer/Proposal + Acceptance +consideration(price).
Contract 2(h):
Any agreement enforceable by the law is contract. An agreement to become a contract must give rise to a legal obligation which means a duly enforceable by law. Every contract has a Right and an Obligation.
Contract = Accepted proposal/Agreement + Enforceability by law
Features/Elements of valid contract(Section 10) AFCL²N:
Quid Pro Quo (qu) (Consideration):
One who gets and gets in return consideration i.e gets something in return in greek.
Not declared as void:
Sec 24 - Agreement is void when obligation is unlawful.
Sec 25 - Agreement without consideration is void.
Sec 26 - Agreement in control of marriage.
Sec 27 - Agreement in control of trade.
Sec 28 - Agreement in control of legal proceedings.
Sec 29 - Agreement void for uncertainty.
Sec 10 - Agreement void by way of wager.
Types of Contract:
Void/Voidable Contract:
Offer 2(a):
When one person signifies other person his willingness to do or control from doing anything with a view to obtaining assent from other party.
Types of Offer:
General offer (made public at large)
Special/Specific Offer (It can be enforced only by whom the contract made)
Gross offer (When 2 parties make identical offer without there is no acceptance (coincident).
Counter offer (Rejection of original offer, acceptance new offer).
Standing offer (The offer will kept open for accept over period of time. Eg. Auction.)
Valid Offer:
Plaintiff /Defendent:
If a person claims complaint is Plaintiff, and other party known as Defendent.
Case study (Ref)
Carlil - Plaintiff vs Carbolic Smoking / Bull co - Defendent.
Acceptance Sec 2(b):
Section 2 (b) defines proposal as-“when the person to whom the proposal is made signifies his assent there to, the proposal is said to be accepted. Proposal when accepted, becomes a promise”.
Valid Acceptance:
Acceptance can be given only by the person to whom offer is made. (Boulon vs Jones 1857 Case Study. Boulton bought a business from Brocklehurst. Jones, who was Broklehurst’s creditor, placed an order with Brocklehurst for the supply of certain goods. Boulton supplied the goods even though the order was not in his name. Jones refused to pay Boultan for the goods because by entering into the contract with Blocklehurst, he intended to set off his debt against Brocklehurst. Held, as the offer was not made to Boulton, therefore, there was no contract between Boulton and Jones.
Acceptance must be absolute and unqualified. As per section 7 of the Act, acceptance is valid only when it is absolute and unqualified and is also expressed in some usual and reasonable manner unless the proposal prescribes the manner in which it must be accepted.
Acceptance must be Communicated to the Offeror.
The Acceptance must be in the Prescribed Manner
The Acceptance must be in Response to Offer. There can be no acceptance without offer. Acceptance cannot precede offer.
Mere Silence is Not Acceptance
The Acceptance must be given before the offer lapses or is revoked
Types of Acceptance:
Express Acceptance. (Oral)
Implied Acceptance. (Oral/Written(Behavioral))
Quasi Contract (Case Study):
If a Post Master delivers a goods to wrong address, if the neighbour gets and the injured person can claim the received neighbour to pay the money.
Quasi-contracts are also called 'constructive contracts' or 'contracts in law' or 'implied contracts'.
Basis
Quasi contracts are based on the “No man must grow rich out of another persons costs".
That is a person shall not be allowed to enrich himself at the expense of another
He has to restore the money or some other benefit which has come into his hands to the other person who has, in the eyes of law, a better title to it.
Features:
This contract is based on the principles of justice, equity and good conscience.
In quasi contract, there is no formal agreement of the parties concerned but is imposed by the law.
It grants to one person a right to money or its equivalent, or to some other benefit and imposes a liability on the other person in connection with such money or its equivalent, or some other benefit that he has already received.
When an obligation created by a quasi contract had not been discharged, the injured party is entitled to receive the same compensation from the party in default, as in the case of an ordinary contract.
Types of Quasi Contract:
- Mann, Richard A., and Barry S. Roberts. Essentials of business law and the legal environment. Cengage Learning, 2019.
- Shah, Komal. Business Law Essentials You Always Wanted To Know. Vibrant Publishers, 2023.