Chartered Accountancy CPT Course Lecture 1 Nature of Contract

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Session 1, Section B Mercantile Law Quick Revision Notes

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What is Contract ? An Agreement enforceable by Law [Section 2(h)] Agreement: Every promise and every set of promises, forming the consideration for each other [Section 2(e)] When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. Proposal when accepted, becomes a promise [Section 2(b)] Enforceable by Law: nt All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void
[Section 10]

Void Contract Definition A contract which ceases to be enforceable by law becomes VOID when it ceases to be enforceable Valid when it is made but subsequently becomes unenforceable Does not provide any legal remedy for the parties to the contract

Voidable Contract Enforceable by law at the option of one or more parties, but nor at the option of other Voidable at the option of the aggrieved party and remains valid until rescinded by him Aggrieved party gets a right to rescind the contract

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Scope Effect on collateral transaction Punishment

Void Contract It may not be illegal Collateral transactions to the agreement may be enforced for execution No punishment for entering

Illegal Contract Its is always Void Collateral transactions to the agreement also become illegal and cannot be enforced Punishment for entering

Nature

Rights

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