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Contract laws in India

Contract laws in India
# Standard Form Contracts
# Wagering Contracts
# Government Contracts

# Contracts of Bailment
# E-Contracts
# Contract Labour
# Contract Ratification
# Quasi-Contracts

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Law of contracts in India defines Contract as an agreement enforceable by law which offers personal rights, and imposes personal obligations, which the law protects and enforces against the parties to the agreement. The general law of contract is based on the conception, which the parties have, by an agreement, created legal rights and obligations, which are purely personal in their nature and are only enforceable by action against the party in default.

Section 2(h) of the Indian Contract Act, 1872[2] defines a contract as "An agreement enforceable by law". The word 'agreement' has been defined in Section 2(e) of the Act as ‘every promise and every set of promises, forming consideration for each other’ 

Law of Contract & Contribution of Lord Denning:
Lord Denning was perhaps the greatest law-making judge of the century and the most controversial. His achievement was to shape the common law according to his own highly individual vision of society. Lord Denning was one of the most celebrated judges of his time. He is popular as a dissenting judge.

Lord Alfred Thompson Denning (1899-1999) was a Populist English judge whose career spanned 37 years. He was known as a fighter for the underdog and a protector of the little man's rights against big business. He served for 20 years as the head of the Court of Appeals, one of the most influential positions in the English legal system. Denning was a controversial judge who was often the dissenting voice on the bench. His decisions were based more on his religious and moral beliefs than the letter of the law and he was often criticized for his subjectivity. Denning retired from the bench in 1982 under a cloud of controversy regarding some racially insensitive views that he published. Denning continued to publish books during his retirement and died at the age of 100....

Validity & formation of a Contract:
According to legal scholar Sir John William Salmond, a contract is "an agreement creating and defining the obligations between two or more parties" For the formation of a contract the process of proposal or offer by one party and the acceptance thereof by the other is necessary. This generally involves the process of negotiation where the parties apply their minds make offer and acceptance and create a contract....
Copyright Contract law Forum:
# Is this job contract is against labour laws?
# Forming Contract Online
# Online Agreements
# Wagering Agreements
# Material Breach - under a Contract
# Shareholders Agreement
# Agency By Estoppel
Copyright Useful links on Contract laws in India:
# Tax on Works Contract
Pre-incorporation contracts
Statutory transaction and contract of sale

Indemnity in a contract
Void & Voidable Agreements
Extension of Time in Service Contracts
Choice of Law by the Parties to the Contract

# Cheque bounce laws


Standard Form Contracts:
The law of contract has in recent time to face a problem, which is assuming new dimensions. The problem has arisen out of the modern large scale and widespread practice of concluding contracts in standardized form. People upon whom such exemption clauses or standard form contracts are imposed hardly have any choice or alternative but to adhere. This gives a unique opportunity to the giant company to exploit the weakness of the individual by imposing upon him terms, which may go to the extent of exempting the company from all liability under contract. It is necessary and proper that their interests should be protected. The courts have therefore devised some rules to protect the interest of such persons...

Post-Termination non-compete clauses in employment contracts:
Indian courts have consistently refused to enforce post-termination non-compete clauses in employment contracts, viewing them as “restraint of trade” impermissible under Section 27 of the Indian Contract Act, 1872 (the Act), and as void and against public policy because of their potential to deprive an individual of his or her fundamental right to earn a livelihood...

Wagering Contracts
The contract Act does not define a wagering agreement. Cotton, L.J. (Thacker v. Hardy) said: “The essence of gaming and wagering is that one party is to win and other to lose upon a future event which at the time of contract is of an uncertain nature, i.e., that if the future event turns out one way A will lose, but if it turns out the other way, he will win”. Hawkins, J. (Carlill v. Carbolic smoke Ball Co.)Said: “It is essential to a wagering contract that each party may under it either win or lose, whether he will win or lose being dependent on the issue of the event and therefore remaining uncertain until, that issue is known. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract”. In this case the defendants promised to pay 100 pounds to anyone who caught influenza after using the smoke ball manufactured by them. It was held not to be a wager because the user could not lose anything if he failed to catch influenza. The important points to be noted here is that there should be equal chances of gain or loss to the parties and it should be regarding an uncertain event. The most striking feature of wager is that each party has the chance of winning or losing.

Government Contracts:
The subject of government contracts has assumed great importance in the modern times. Today the state is a source of wealth. In the modern era of a welfare state, government's economic activities are expanding and the government is increasingly assuming the role of the dispenser of a large number of benefits. Today a large number of individuals and business organizations enjoy largess in the form of government contracts, licenses, quotas, mineral rights, jobs, etc. This raises the possibility of exercise of power by a government to dispense largess in an arbitrary manner. It is axiomatic that the government or any of its agencies ought not to be allowed to act arbitrarily and confer benefits on whomsoever they want. Therefore there is a necessity to develop some norms to regulate and protect individual interest in such wealth and thus structure and discipline the government discretion to confer such benefits.

Contract- II: Bailment:
Contracts of Bailment are a special class of contract. These are dealt within Chap. IX from S.148 to 181 of the Indian Contract Act, 1872. Bailment implies a sort of one person temporarily goes into the possession of another. The circumstance in which this happens are numerous. Delivering a cycle, watch or any other article for repair, delivering gold to a goldsmith for making ornaments, delivering garments to a drycleaner, delivering goods for carriage, etc. are all familiar situations which create the relationship of ‘Bailment’....

A Study of Contract Labour (Regulation and Abolition) Act, 1970:
Contract labourers also suffer from inferior labour status, casual nature of employment, lack of job security and poor economic conditions. It was also observed that in some cases the contract labourers did the same work as the workers directly employed by the industrialist but were no paid the same wages and the same working conditions. This practice of contract labour has also lead to the exploitation of these labourers as they are not employed directly under the employer. This practice of exploitation was and still is very much prevalent in India, therefore to encounter such problem and also to regulate the conditions of these labourers the Govt. passed an Act called the Contract Labour (Regulation and Abolition) Act, 1970.....

Contract Labour:
Basic instinct. Hearing the concept of labour, what strikes the minds of the layman is the name sakingly clad men and women who work at construction sites, factories and alongside the roads, working in the scorching sun and pitiful conditions. Does it ever come to the minds of the general public that these labourers have a huge set of laws governing and safeguarding their rights ? yes. Probably some of us do know about labour laws. Ever given a second thought about the implementation of these laws and regulations which are painstakingly formulated? Not that they are not followed at all but come on! We’re aware of the scene here in our country...

E-Contracts:
It’s an undisputed fact that E-Commerce has become a part of our daily life. One such justification for the popularization of E-Commerce would be immoderate technological advancement. E-Commerce, as the name suggests, is the practice of buying and selling goods and services through online consumer services on the internet. The ‘e’ used before the word ‘commerce’ is a shortened form of ‘electronic’. The effectiveness of E-Commerce is based on electronically made contracts known as E-Contracts. Although E-Contracts are legalized by Information Technology Act but still majority feels insecure while dealing online. The reason being lack of transparency in the terms & conditions attached to the contract and the jurisdiction in case of a dispute that may arise during the pendency of a transaction with an offshore site...

Specific performance of Contracts:
Specific performance is equitable relief, given by the court to enforce against a defendant, the duty of doing what he agreed by contract to do. Thus, the remedy of specific performance is in contrast with the remedy by way of damages for breach of contract, which gives pecuniary compensation for failure to carry out the terms of the contract. Damages and specific performance are both, remedies available upon breach of obligations by a party to the contract; the former is a ‘substitutional’ remedy, and the latter a ‘specific’ remedy. The remedy of specific performance is granted by way of exception....

The Contract Labour (Regulation And Abolition) Act, 1970:
The Object of the Contract Labour Regulation and Abolition) Act, 1970 is to prevent exploitation of contract labour and also to introduce better conditions of work. A workman is deemed to be employed as Contract Labour when he is hired in connection with the work of an establishment by or through a Contractor. Contract workmen are indirect employees. Contract Labour differs from Direct Labour in terms of employment relationship with the establishment and method of wage payment....

Regulation of Contract Labour:
Contract Labour is one of the acute form of unorganized labour. Under the system of contract labour workers may be employed through contractor on the contract basis. Workmen shall be deemed to be employed as contract labour or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer. In this class of labour the contractors hire men (contract labour) who do the work on the premises of the employer, known as the principal employer but are not deemed to be the employees of the principal employer. The range of tasks performed by such contract workers varies from security to sweeping and catering and is steadily increasing. It has been felt, and rightly too, that the execution of a work on contract through a contractor who deployed the contract labour was to deprive the labour of its due wages and privileges of labour class....

Doctrine of Frustration & Force-Majeure Clause:
The requirements of Force-Majeure are:
(a) It must proceed from a cause not brought about by the defaulting party’s default.
(b) The cause must be inevitable and unforeseeable.
(c) The cause must make execution of the contract wholly impossible....

The Calculation of Damages in EPC Contracts in India:
The engineering & construction industry, especially that in India, is dynamic and highly volatile, making it susceptible to tremendous amounts of litigation and other forms of alternative dispute resolution. The rapid and substantial growth in the magnitude of this industry has resulted in the increased need for information about the rights and obligations of the various players involved in the execution of a particular work of construction. It has become essential that proper attention is given to assert one’s rights and discharge one’s obligations as laid down by the law and also by a correct understanding of the meaning and interpretation of the terms of the contract governing such relationships, as otherwise the basis of estimates and calculations made will become infructuous...

Liquidated Damages:
The Indian Contract Act, 1872, provides a basic structure of the law of contract in India, its enforcement, various provisions regarding non-performance and the breach of contract. This report is aimed to highlight provisions regarding liquidated damages in case of the breach of the contract and to bring about a comparative study between India and England regarding it. Thus, before knowing what exactly liquidated damages are, it is important to understand the consequences of breach of contract and the damages awarded in case of breach. A party who is injured by the breach of a contract may bring an action for damages and Damages means compensation in terms of money for the loss suffered by the injured party. Thus, in contract when these damages are awarded it is known as liquidated damages...

Privity of contract & third party beneficiary in a contract:
The doctrine of privity of contract means that only those involved in striking a bargain would have standing to enforce it. In general this is still the case, only parties to a contract may sue for the breach of a contract, although in recent years the rule of privity has eroded somewhat and third party beneficiaries have been allowed to recover damages for breaches of contracts they were not party to. There are two times where third party beneficiaries are allowed to fall under the contract. The duty owed test looks to see if the third party was agreeing to pay a debt for the original party. The intent to benefit test looks to see if circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. Any defense allowed to parties of the original contract extend to third party beneficiaries[1]. A recent example is in England, where the Contract (Rights of Third Parties) Act 1999 was introduced...

Contract Ratification:
Ratification is in law equivalent to previous authority it may be expressed or it may be affected impliedly by conduct.[1] Section 196 and 197 of the act show that an act done by person who is not authorized to do it, but who purports to act as an agent for another person, can retrospectively ratified by such other person. From this it follows logically, that such an act on the part of the person purporting to act as agent is not void but voidable. If it is not ratified it becomes void but if it is ratified it will be validated....

Relevance of Quasi-Contracts:
There are certain situations wherein certain persons are required to perform an obligation despite the fact that he hasn’t broken any contract nor committed any tort. For instance, a person is obligated to restore the goods left at his home, by mistake, and keep it in good condition. Such obligations are called quasi-contracts...


Choice of law by the parties to the contract:
In this era of globalization where a contract contains one or more foreign elements, the difficult and complicated question in proceeding that arises is that of ascertaining its applicable law. Such difficulty stems from the multiplicity and diversity of connecting factors and each of them may arise in a different jurisdiction for instance the place where the contract was made; the place of performance; the place of business of the parties; the place of payment; the currency of payment; domicile or nationality o the parties and so on. So to avoid this situation parties are granted with the freedom to select the law to govern their contract under the provisions of Rome convention. The inclusion of a choice of law clause is such an everyday matter in international contracts that its absence would be to ignore commercial realities...

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Laws on E-contracts in India

E-contracts & issues involved in its formation:
With the advancements in computer technology, telecommunication and information technology the use of computer networks has gained considerable popularity in the recent past, computer networks serve as channels between for electronic trading across the globe. By electronic trading we don’t just mean the use of computer networks to enter into transaction between two human trading partners by facilitating a communication but electronic trading or electronic commerce also means those contracts which are entered between two legal persons along with the aid of a computer program which acts as an agent even when it has no conscious of its own but also by initiating it....

Evidentiary Value Of E-Contracts:
It’s an undisputed fact that E-Commerce has become a part of our daily life. One such justification for the popularization of E-Commerce would be immoderate technological advancement. E-Commerce, as the name suggests, is the practice of buying and selling goods and services through online consumer services on the internet. The ‘e’ used before the word ‘commerce’ is a shortened form of ‘electronic’. The effectiveness of E-Commerce is based on electronically made contracts known as E-Contracts. Although E-Contracts are legalized by Information Technology Act but still majority feels insecure while dealing online. The reason being lack of transparency in the terms & conditions attached to the contract and the jurisdiction in case of a dispute that may arise during the pendency of a transaction with an offshore site

E-Contracts & Its Legality:
E-contract is a contract modeled, specified, executed and deployed by a software system. E-contracts are conceptually very similar to traditional (paper based) commercial contracts. Vendors present their products, prices and terms to prospective buyers. Buyers consider their options, negotiate prices and terms (where possible), place orders and make payments. Then, the vendors deliver the purchased products. Nevertheless, because of the ways in which it differs from traditional commerce, electronic commerce raises some new and interesting technical and legal challenges. For recognition of e-contracts following questions are needed to be considered...

Electronic Contract:
In the traditional notion of contract formation, negotiating parties must come to a "meeting of the minds" on the terms of an agreement. In the course of negotiation, there may be invitations to make offers (e.g., price lists are generally not offers, but invitations) and counter-offers, but the general rule is that formation requires an offer and acceptance to be communicated between the parties....

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Contract Law Jurisdiction: Panama:
Under Panama Civil Law the general rule is that all contracts are consensual, which is to mean that they are perfected by the mere consent of the parties. Consequently, and except if expressly established by law that a contract is formal or real, it must be understood to be consensual, without prejudice to the liberty granted by law to the parties to give a consensual contract the character of formal....

Standard Form Contract:
The Law of Standard Form Contracts rests on intuitions of the common mass. This research paper explores these intuitions and examines intended consumer behavior on common contracting contexts. Firstly, the research paper focuses on the need of Standard Form Contracts and its justification. After the clear explanation of the term and its use in the practical world, the focus shifts to the legal issue, as to what are the problems with the issuance of Standard Form Contracts on a large scale, and how it can prove to be of exploitative nature. Further, the paper discusses the basic tendency of the consumers towards the acceptance of the Standard Form Contracts, the reasons for such acceptance and how the party issuing the Standard Form Contract can take advantage of the consumer’s ignorant behaviour....

Arbitration clause v. Contingent Contract:
Section 32 and 33 provide for when are such contracts enforceable. Section 32 says when a contingent contract to do or not to do anything depends on the happening of an uncertain future event cannot be enforced by law unless and until that event has happened and in case the event becomes impossible, then the contract becomes void. Section 33 provides that if a contingent contract to do or not to do anything depends on an uncertain future event not happening, it can be enforced only when the happening of that event becomes impossible and not before...

Section 65 of the Indian Contract Act, 1872 with special reference to Discharge of a Contract by Frustration:
The effects of frustration with special reference to the restitution of advantages or benefits received by a party, not entitled to such advantage or benefit. On account of an agreement being deemed void, subsequent to certain obligations being fulfilled by either party, there would continue to subsist, rights to make good the loss caused. Section 65 of the Indian Contract Act, 1872, states...

Standard form of Contract:
The law of contract has in recent time to face a problem, which is assuming new dimensions. The problem has arisen out of the modern large scale and widespread practice of concluding contracts in standardized form. People upon whom such exemption clauses or standard form contracts are imposed hardly have any choice or alternative but to adhere. This gives a unique opportunity to the giant company to exploit the weakness of the individual by imposing upon him terms, which may go to the extent of exempting the company from all liability under contract. It is necessary and proper that their interests should be protected. The courts have therefore devised some rules to protect the interest of such persons....

Underwriting contract at the time of issue of securities:
Financial services are an important component of the financial system. They fulfill the needs of financial institutions, financial markets and financial instruments. The smooth functioning of a financial system will depend upon the range of financial services extended by the providers. The services contribute a lot to the efforts of speeding up the process of economic growth and development...

Importance of hardship clauses in contract:
The impact of the economic slowdown, witnessed all over the world, on the commercial contract, both international and domestic, had been enormous. There have been instances, where one of the parties to the contract had failed to perform its obligations under the contract because of the sheer enormity of the consequences of economic slowdown. In most of these cases, it was felt, and rightly so, by one of the parties that to continue with the obligations under the contract amidst the current economic scenarios would have been fatal for them. However, one ought to be sympathetic for them considering the laws prevailing in our country are inadequate for protecting the interests of the contracting parties in the event of such hardships....


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