In order to understand the importance of contract law, we must have understand the meaning of CONTRACT.
Contract can also be understand as an agreement between two or more parties which should be voluntary and enforceable by law for a particular purpose.
Contract is the branch of law of obligations in jurisdiction of the civil law tradition.
Now, if we talk about Contract Law, it take cares of the rights and duties which are mentioned in the Contract Law.
Contract can only arise when the parties to the contract are agree that there is as agreement. There are certain requirement which are necessary for the formation of Contract which are as follows-
- OFFER-
In order to form a contract there must be an offer from the party. An offer is a definite statement of the offeror’s willingness which is most important requirement for the formation of Contract.
- ACCEPTANCE-
Once offer has been made, acceptance to that offer from second party is necessary. If offer has been rejected by the second party then Contract cannot be formed.
- CONSIDERATION-
Consideration can be provided in the form of money or a promise to do or not to do something. For valid Contract there must be “quid pro quo” i.e. something in return. This means that when party promises to do something then he must get something in return from other party, it can be some right, benefit, interest or profit.
When there is no Consideration, there is no CONTRACT.
- MUTUAL INTENT TO BE BOUND-
There must be an mutual intentions of both the parties that they are agree to Make an agreement and that they would be legally bound by law for rights and duties as per the contract.
Parties which are entering into the contract must have capacity to enter the agreement. Minors, intoxicated persons and those under a mental affliction may have insufficient capacity to enter a contract.
Contract which did not follow the requirement above mentioned is not a valid contract.
There are 4 types of Contract on the basis of Enforceability-
- VALID CONTRACT-
A Contract which satisfies all the conditions mentioned by law is a valid contract.
- VOID CONTRACT-
It is a contract which is valid when it is made but which subsequently became void due to impossibility of performance, change of law or some other reason.
- VOID AGREEMENT-
The agreement which are not enforceable by law are void. Such agreements can also be known as void – ab – initio which means they became unenforceable right from the time they are made.
- VOIDABLE AGREEMENT-
It is the agreement in which the consent of one party is free, but the consent of other party is being obtained under influence or fraud or misinterpretation.