Law of Contract

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 Learning Goals

1 Meaning of Law
2 Meaning of Contract
3 Essential Elements of Contract
4 Classification of Contracts
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 Meaning of Law
Oxford English Dictionary
The system of rules which a particular country or
community recognizes as regulating the actions of its
members and which it may enforce by the imposition of
penalties.

Cambridge Dictionary:
A rule, usually made by a government, that is used
to order the way in which a society behaves.

Salmond:
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Law is the body of principles recognized and applied by

the State in the administration of justice. 3
 Meaning of Mercantile/Business Law

The branch of law which comprises laws concerning

trade, industry, and commerce.
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 Law of Contract
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 Meaning of Contract
Year of passing: The Contract Act, 1872
Year of enforcement: September 1872
Meaning Contract :
Section 2(h) : “An agreement enforceable by law is a
contract”.
Meaning of Agreement:
Section 2(e): “ An agreement is defined as every promise
and a set of promises , forming the consideration for
each other”.
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 Parties to a Contract

 Offeror – The party who makes an offer to enter into a

contract
 Offeree – The party to whom an offer to enter into a
contract is made

Offer
Offeror Offeree

Acceptance
Offeror makes an Offeree has the power
offer to the offeree to accept the offer and
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create a contract
 Elements of Contract
An agreement becomes a contract if fulfills the following
elements:
1. Plurality of Numbers
2. Offer and Acceptance
3. Intention to create legal relationship
4. Lawful consideration
5. Capacity of the parties
6. Free consent of the parties
7. Legality of the object
8. Certainty
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 Elements of Contract

9. Possibility of performance
10. Writing, registration and legal formalities
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 Types of Contract
Contracts my be classified according to their:
A. Validity
1. Valid
2. Void
3. Voidable
4. Illegal
5. Unenforceable
B. Formation
1. Express contract
2. Implied contract
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3. Quasi contract
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 Types of Contract

C. Performance / Time of performance

1. Executed contract
2. Executory contract
D. Parties
1. Bilateral
2. Unilateral
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 Classifications of Contracts:
Formation (1 of 2)
1. Bilateral contract – a promise for a
promise

2. Unilateral contract – A promise for an act

3. Express contract – A contract expressed

in oral or written words

4. Implied-in-fact contract – A contract

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inferred from the conduct of the parties

 Classifications of Contracts:
Formation (2 of 2)
5. Quasi-contract – A contract implied by
law to prevent unjust enrichment

6. Formal contract – A contract that

requires a special form or method of
creation

7. Informal contract – A contract that

requires no special form or mode of
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creation
 Classifications of Contracts:
Enforceability
1. Valid contract – A contract that meets all
of the essential elements to establish a
contract
2. Void contract – No contract exists
3. Voidable contract – A party has the
option of voiding or enforcing the
contract
4. Unenforceable contract – A contract that
cannot be enforced because of a legal
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defense
 Classifications of Contracts:
Performance
1. Executed contract – A contract that is
fully performed on both sides

2. Executory contract – A contract that is

not fully performed by one or both
parties
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