Page 7 - DMGT102_MERCANTILE_LAWS_I

Unit 1: Law of Contract
Manpreet Kaur, Lovely Professional University

Unit 1: Law of Contract Notes

CONTENTS

Objectives
Introduction
1.1 Meaning of Mercantile Law
1.1.1 Objectives
1.1.2 Sources of Indian Business Law
1.2 Contracts

1.3 Classification of Contracts
1.3.1 Classification of Contracts According to Formation

1.3.2 Formal and Informal Contracts

1.3.3 Classification According to Validity
1.4 Essential of Contract
1.5 Illegal and Void Agreements
1.6 Distinction between Void Agreement and Voidable Contract
1.7 Summary
1.8 Keywords

1.9 Self Assessment
1.10 Review Questions
1.11 Further Readings

Objectives

After studying this unit, you will be able to:
z Explain meaning of contract
z Discuss essential of valid contract

z Describe classification of contract
Introduction

As you all know that we enter into contracts every day. Some of these are made consciously, for
example, purchase or sale of a share of a company or a plot of land. Sometimes we do not even
realise that we are making a contract, e.g., hiring a taxi, buying a book, etc. In any case, a contract,
howsoever made, confers legal rights on one party and subjects the other party to some legal
obligation. In the case of people engaged in business, they carry on business by entering into
contracts. Thus, the business executives, corporate counsels, entrepreneurs, and professionals
in different fields deal frequently with contracts. At times, they have to draft one such contract

or scrutinize it or provide inputs to its making or even interpret it. Therefore, it is necessary for
them to know what constitutes a contract. The law relating to contracts is contained in the Indian
Contract Act, 1872. For business executives, contract law is tremendously signifi cant because it
underlies or is related to all major areas of law affecting business.

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