1. LEGAL ASPECTS OF BUSINESS

2. LAW Law is a system of rules, usually enforced through a set of institutions. It shapes politics, economics and society in numerous ways and serves as the foremost social mediator in relations between people. Law governs a wide variety of social activities.

3. Contract law regulates everything from buying a bus ticket to trading on derivatives markets. Property law defines rights and obligations related to the transfer and title of personal and real property. criminal law offers means by which the state can prosecute the perpetrator

4. INDIAN CONTRACT ACT- 1872 The Indian contract act, 1872 lays down the law relating to contracts.

5. CONTRACT A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act which is enforceable in a court of law. It is a binding legal agreement.

6. AGREEMENT Every promise or set of promises forming consideration for each other.

7. ESSENTIALS OF A VALID CONTRACT AGREEMENT FREE CONSENT CONTRACTUAL CAPACITY LAWFUL CONSIDERATION LAWFUL OBJECT NOT EXPRESSLY DECLARED VOID POSSIBILITY OF PERFORMANCE CERTAINITY OF TERMS INTENTION TO CREATE LEGAL OBLIGATION LEGAL FORMALITIES

8. CLASSES OF CONTRACTS Valid Contracts Void Contracts Voidable contracts Illegal contracts Unenforceable contracts

9. Valid Contract It is a contract which satisfies all the requirements provided for under sec. 10

10. Void Contract A void contract, also known as a void agreement, is not actually a contract. A void contract cannot be enforced by law. It creates no rights or obligations.

11. An agreement to carry out an illegal act is an example of a void contract or void agreement. For example, a contract between drug dealers and buyers is a void contract simply because the terms of the contract are illegal.

12. Voibable Contract A voidable contract, unlike a void contract, is a valid contract. At most, one party to the contract is bound. For example, depending upon jurisdiction, a minor has the right to repudiate certain contracts. Any contract with a minor is thus a voidable contract.

13. If a minor were to enter into a contract with an adult, the adult would be bound by the contract, whereas the minor could choose to avoid performing the contract.

14. Illegal Contract An illegal agreement, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end.

15. Unenforceable Contract An illegal agreement, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. Which is valid but for certain reasons such as want of proof, expiry of period within which enforceable etc it becomes unenforceable.

16. Offer Or Proposal When one person signifies to another his willingness to do or to abstain anything from doing he is said to make proposal.

17. Essentials of a Valid Offer An offer may be general or specific An offer should be made with an intention of creating legal obligation An offer must be definite and certain A statement of intention and an invitation to offer are not offers. An offer must be communicated to the offeree. The terms and conditions of offer should also be communicated Two identical offers do not make a contract An offer should not contain any term the non-compliance of which amounts to acceptance

18. Acceptance When one person to whom the proposal is made signifies his willingness thereto the proposal is said to be accepted.

19. Rules Regarding Acceptance An offer can be accepted only by the person to whom it is made. Acceptance should be unconditional and absolute. Acceptance should be communicated Acceptance should be according to the prescribe form Acceptance must be provoked by an offer.

20. Acceptance must be given before the offer lapses or is revoked. Provisional acceptance is no acceptance.

21. Contract By Post Under English Law, the proposer is legally bound by acceptance effected through postal medium when the letter is prepared, addressed, stamped and mailed even through it is delayed or lost in transit. Indian law lays down that ‘ communication of acceptance is complete as against the proposer when it is put in a course of transmission to him so as to be out of the acceptor; as against the acceptor when it comes to the knowledge of proposer.

22. TERMINATION OF OFFER Lapse Failure to fulfill a condition procedent Rejection Destruction of subject matter revocation

23. Contractual capacity Section II lays down that “ every person is competent to contract who is of the age of majority according to the law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject.

24. Minor Minor is a person who has not attained the age of majority. Age of 18 years is a major.

25. Principles governing minors contracts No estoppels against minor No liability in contract or tort arising out of contract Doctrine of restitution Beneficial contracts Ratification Liability for necessaries

26. Free consent Section 13 of the act defines consent as “ two or more persons are said to consent where they agree upon the thing in the same sense”.

27. Coercion Coercion is the committing or threatening to commit any act forbidden by the Indian Penal code or the unlawful detaining or threatening to detain any property.

28. Undue Influence Undue influence refers to “ the unconscious use of power over another person, such power being obtained by virtue of a present or previously existing dominating control arising out of relationship between the parties.

29. Presumptions as to undue influence Parent and child Guardian and ward Trustee and beneficiary Religious advisor and disciple Doctor and patient Solicitor and client Fiancé and fiancée

30. Contracts with pardanashin woman Unconscionable or catching bargains

31. Difference between undue influence and coercion In coercion, contract is obtained by committing or threatening to commit an act punishable under Indian Penal code. In undue influence the consent is obtained by dominating the will of other.

32. Coercion involves physical force whereas undue influence involves moral force. Coercion may proceed from a stranger and may be directed against a stranger whereas undue influence must proceed from a party to the contract.

33. The offence may be committed in or outside India in order to render it coercion whereas undue influence may be exercised in India.

34. Fraud In the broadest sense, a fraud is a deception made for personal gain or to damage another individual. Fraud is a crime and is also a civil law violation

35. Essentials of Fraud Making a false suggestion. The active concealment of a fact by a person who has knowledge or belief of the fact. A promise made without performing it. The party acting on the representation should have been deceived and suffered damage. Active concealment of the facts amounts to fraud.

36. Silence- whether fraud? Silence is fraud under two circumstances: There is no general duty cast upon a party to a contract to disclose to the other party material facts within his knowledge but are unknown to the other party.this principle is known as ‘caveat emptor’(let the buyer beware).

37. When a person is under no duty to speak, he may become guilty of the fraud by non- disclosure, if he voluntarily discloses something and then stops half the way.

38. Misrepresentation It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation.

39. Essentials of Misrepresentation Positive assertion of the fact Breach of duty Causing mistake about the subject matter

40. Mistake Mistake refers to mis-understanding or wrong thinking or wrong belief. Mistake may be mistake of fact( unilateral or bilateral) Mistake of law