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Unit 1: Law of Contract

State whether the following statements are true or false: Notes

5. According to Section 15 “All agreements are contracts if they are made by the free consent
of the parties competent to contract, for a lawful consideration and with a lawful object,
and are not hereby expressly declared to be void”.

6. The objective of the agreement must be lawful. Any act prohibited by law will not be valid
and such agreements cannot be treated as a valid contract.
7. Section 24 to 30 specify certain types of agreement which have been expressly declared
void.
8. An agreement must be supported by a consideration of something in return.

1.10 Review Questions

1. What is a contract? Why must you, as a manager, know as to what constitutes a contract?
2. What tests would you apply to ascertain whether an agreement is a contract?
3. Are there any essentials of a contract so as to make it enforceable by law?
4. “All agreements are not contracts but all contracts are agreements”. Comment.
5. Explain what do you understand by ‘void’, ‘voidable’, ‘illegal’ and ‘valid’ contracts. Briefl y
refer to the rights of parties under such agreements.
6. Enumerate some of the contracts which are expressly declared to be void by the Indian
Contract Act, 1872.
7. How safe are oral contracts?
8. “There are some contracts and documents which are required to be not only in writing
and signed by the parties, but in addition, required to be registered with some competent
authority or the other”. Discuss.

Answers: Self Assessment

1. implied contract 2. voidable contract
3. enforceable 4. illegal agreement
5. False 6. True
7. True 8. True

1.11 Further Readings

Books G. Vijayaragavan Iyengar (2007), Introduction to Banking, Excel Books, New Delhi,
India.
S .S Gulshan, Business Law, Third Edition, 2006, Excel Books, New Delhi.
S.S Gulshan, Mercantile Law, Third Edition, 2006, Excel Books, New Delhi.

Online links
http://lawcommissionofi ndia.nic.in/1-50/Report13.pdf
http://business.gov.in/manage_business/contract_law.php

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