Contract Law

Under the law of contract, an agreement is a promise forming the consideration for each other. When an agreement is brought about by compulsion, it is enforceable by law. Where an agreement under the contract act is not enforceable by law, it is a void agreement. Void means not valid.

Section 2(b) of the Indian Contract Act states that when a person to whom the proposal is made signifies his assent, the proposal is said to be accepted. Thus, an offer may be accepted only by the person to whom it is made.

It is a Latin term which means meeting of minds. If two parties enter into an agreement, both parties must have the same understanding of the terms used in the agreement.

The agreement (not contract) with or by a minor is void ab-initio. Voidable contract is valid at the option of one or more of parties but not at the option of other party. A valid contract contains all the essential elements of a contract.

The reasonable time depends upon the facts of the cases (as per Section 46). This time period may be very short as in the cases of purchase-sale of shares, gold, etc. It may be a longer period as in case of sale or purchase of property, etc. thus it is a question of fact. The law will not decide the reasonable time.

 A tender is an invitation to offer.

Option (3) is correct. If there is a fraud, then the contract can be set aside and damages can also be recovered. In case of misrepresentation, the damages can’t be asked for. Damages can be asked for when there is a breach of warranty.

Option (1) is correct. A contingent contract is that where the performance depends upon uncertain future event. Thus it is valid.

Voidable contract is valid at the option of one or more of parties but not at the option of other party. A valid contract contains all the essential elements of a contract. An illegal contract is the one, which is against the provisions of law. A void contract becomes void subsequent to formation.

A contract may be discharged due to government induced restriction, destruction of subject matter or due to death or incapacity in case of personal services. It is not discharged because the parties to the contract do not find it profitable any more. Thus (1) is the correct answer.

A hiba or simple gift made gratuitously between living persons literally means the donation of a thing.

There are five requirements for a valid insurance contract. These are:  -insurable interest

-legal capacity

-consideration

-meeting of the minds

-offer and acceptance

Thus, option 2 is the correct answer. 

Endorsements - additional forms attached to the policy form that modify it in some way, either unconditionally or upon the existence of some condition. Endorsements can make policies difficult to read for non-lawyers; they may modify or delete clauses located several pages earlier in the standard insuring agreement, or even modify each other. Because it is very risky to allow non-lawyer underwriters to directly rewrite core policy language with word processors, insurers usually direct underwriters to modify standard forms by attaching endorsements pre-approved by counsel for various common modifications.

Liquidated damage is an estimated amount equal to the extent of injury that may occur, if the contract is breached. These damages are determined when a contract is drawn up and serve as protection for both parties that have entered the contract.

The person getting an insurance policy must have an insurable interest in the property or life insured. A person is said to have an insurable interest in the property if he is benefited by its existence and be prejudiced by its destruction. Without insurable interest, the insurance contract is void. The ownership of a property is not necessary for establishing insurable interest. A banker has an insurable interest in the property mortgaged to it against a loan.