FORMAT OF CONTRACT

A contract is an agreement between two or more parties that creates a legal obligation. Contracts can be formed in a variety of ways and can take many forms, depending on the parties’ intentions and the subject matter of the agreement. The format of a contract is an important consideration because it can affect how the terms of the agreement are interpreted and enforced. In this essay, we will explore the format of contracts in India, with an example and a suitable case law.

Format of Contract:

In India, the format of a contract depends on the type of contract and the parties involved. For example, a simple contract between two individuals for the sale of a car may be written on a piece of paper and signed by both parties. On the other hand, a complex commercial contract between two companies may be written on multiple pages and may include detailed provisions, such as warranties, indemnities, and dispute resolution clauses.

The essential elements of a contract are an offer, acceptance, consideration, and an intention to create legal relations. These elements may be expressed or implied, depending on the circumstances of the agreement. The terms of the contract must be clear and unambiguous, and the parties must have the capacity to enter into the agreement. A contract may be oral or written, but it is always advisable to have a written agreement to avoid any ambiguity or misunderstanding between the parties.

Offer and Proposal are used concurrently. Offer is used in British law, whereas Proposal is used in Indian law.

The term Offer is also called a Proposal. The first step in the format of a contract is the substance of a proposal. To constitute a contract there must be an offer and acceptance. The person who makes an offer is called” Offeror” and the person who accepts the offer is called “Offeree” or” Acceptor”.

Definition According to sec. 2(a) of Indian contract Act, 1872 defines an offer as “when one person signifies his willingness to another person to do or to abstain from doing anything with a view to obtain the assent of that other to, such act or abstinence, he’s said to make a proposal”.

Section 2(b) defines” promise” as,” when a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;

According to Section 2(c) of the Indian Contract Act, the person making the proposal is called the “promisor”, and the person accepting the proposal is called the “ promisee ”,

Example of Contract:

Let’s take an example of a contract between a software company and a client for the development of a mobile application. The contract may include the following terms:

Offer: The software company offers to develop a mobile application for the client as per the specifications provided by the client.

Acceptance: The client accepts the offer and agrees to pay the software company a fixed amount for the development of the mobile application.

Consideration: The consideration for the contract is the payment made by the client to the software company.

Intention to create legal relations: The parties intend to create a legally binding agreement.

Terms and conditions: The contract may include terms and conditions, such as the timeline for the development of the mobile application, the testing procedures, and the intellectual property rights.

Dispute resolution: The contract may also include a dispute resolution clause that specifies the process for resolving any disputes that may arise between the parties.

For an offer to be valid and enforceable succeeding conditions are to be satisfied

1) There must be two parties

There must be at least two people, a person to make a proposal and the other person to accept it. Legal persons and artificial persons all are included in person.

2) The proposal must be communicated

An offer is effective only when it’s communicated to the person to whom it’s made unless an offer is communicated; there’s no acceptance and no contract.

Example LALMAN SHUKLA (VS) GAURI DATT.( 1913)

Facts ‘G’ sent his servant, ‘L’ to trace his missing nephew. He also announced that anybody would be entitled to a certain reward. ‘L’ traced the boy in ignorance of his advertisement. Thereafter, when he came to know of his reward, he claimed it.

Judgment He wasn’t entitled to the reward. Because the offer has not been communicated to him.

3) Offer must be distinguished from an invitation to offer

A proposer/ offer must be distinguished from an invitation to offer. In the case of an invitation to offer, the person sending out the invitation doesn’t make any offer, but only invites the party to make an offer. Similar invitations for offers aren’t offered in the eyes of the law and don’t become agreement by the acceptance of similar offers.

Illustration; trade of goods price list, railway list, banking list

4) Offer may be expressed (or) implied

An offer may be made either by words (or) by conduct. An offer that’s expressed by words (i.e., spoken or written) is called an express offer, and an offer that’s inferred from the conduct of a person (or) the circumstances of the case is called an ‘implicit offer ’.

5) Offer may be specific (or) general

An offer is said to be specific when it’s made to a definite person, such an offer is accepted only by the person to whom it’s made. On the other hand, general offer is one that’s made to the public at large and may be accepted by anyone who fulfilled the essential conditions.

Example: Carlill (vs.) Carbolic Smoke Ball company (1893).

Facts: A company advertised in several newspapers that a reward of L 100 (pounds) would be given to any person who contracted influenza after using the smoke ball according to the printed directions. Once Mrs. Carlill used the smoke balls according to the directions of the company but contracted influenza.

Judgment she could recover the amount by using the smoke balls she accepted the offer. There’s no need to communicate in a General offer.

6) Offer must be made with a view to obtaining the assent

An offer to do (or) not to do something must be made with a view to carrying the assent of the other party addressed and it shouldn’t be made simply with a view to exposing the intention of making an offer.

7) Offer mustn’t be a statement of price

A mere statement of price isn’t treated as an offer to vend. Thus, an offer mustn’t be a statement of price.

Example: HARVEY (VS) FACEY( 1893)

Facts: Three telegrams were changed between Harvey and Facey.

(a) “Will you vend us your Bumper hall pen? Telegram smallest cash price- answer paid”.( Harvey to Facey).

(b) “smallest price for bumper hall pen L 900( pounds) ”.( Facey to Harvey)

(c) “We agree to buy Bumper hall pen for the sum of L 900( pounds) asked by you ”.( Facey to Harvey)

Judgment There was no concluded contract between Harvey and Facey. Because a mere statement of price isn’t considered an offer to vend.

8) Offer must be able of creating legal relations

A social invite, indeed if accepted, doesn’t generate a legal relationship because it isn’t so intended to generate a legal relationship. Thus, an offer must be similar as would affect in a valid contract when it’s accepted.

Example: Balfour vs. Balfour

Facts

Balfour was a civil engineer and worked for the Government as the Director of Irrigation in Ceylon (now Sri Lanka). Mrs. Balfour was living with him. In 1915, they both came back to England. Balfour’s leave. But Mrs. Balfour had developed rheumatoid arthritis. Her doctor advised her to stay in England because the climate in Ceylon would be mischievous to her health. Mr. Balfour’s boat was about to set passage, and he orally promised her£ 30 a month until she came back to Ceylon. They drifted apart, and. Balfour wrote saying it was better that they remain piecemeal. In March 1918, Mrs. Balfour sued him to keep up with the monthly£ 30 payments. In July she got a decree nisi and in December she attained an order for alimony.

At first case,

Judge Charles Sargant held that Mr. Balfour was under an obligation to support his wife.

Judgment

The Court of Appeal unanimously held that there was no enforceable agreement, although the depth of their reason differed.

9) Offer must be specific, definite, and not vague

Still, indefinite, and uncertain, if the terms of the offer are vague.

Suitable Case Law:

One of the most famous cases in Indian contract law is the case of Balfour v Balfour (1919). In this case, a husband promised to pay his wife a monthly allowance while he was working in Ceylon, but the promise was made in the course of a domestic conversation and was not intended to be legally binding. When the husband stopped making the payments, the wife sued him for breach of contract. The court held that there was no intention to create legal relations between the husband and wife and that the promise was a social agreement rather than a legally binding contract. The court stated that “the ordinary presumption is that in domestic agreements, there is no intention to create legal relations, unless the contrary is clearly expressed.”

This case highlights the importance of the intention to create legal relations in a contract. It also shows that not all agreements are legally binding, and the circumstances surrounding the agreement are crucial in determining whether the agreement is a contract or a social agreement.

Conclusion:

In conclusion, the format of a contract in India depends on the type of contract and the parties involved. A contract can be oral or written, but it is always advisable to have a written agreement to avoid any ambiguity or misunderstanding between the parties. The essential elements of a contract are an offer, acceptance, consideration, and an intention to create legal relations. The terms of the contract must be clear and unambiguous, and the parties must have the capacity to enter into the agreement.