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Questions and Answers
What is true regarding voidable contracts?
What is true regarding voidable contracts?
- They can only be voided by the party who created the contract.
- They are always illegal under the law.
- The aggrieved party has the choice to affirm or reject them. (correct)
- They are automatically void from the start.
Which of the following best describes illegal contracts?
Which of the following best describes illegal contracts?
- Contracts that have an unlawful object or are against public policy. (correct)
- Contracts that are subject to negotiation and modification.
- Contracts that can be enforced unless contested.
- Contracts that can be voided by any party involved.
What distinguishes void contracts from voidable contracts?
What distinguishes void contracts from voidable contracts?
- Void contracts are enforceable under all circumstances.
- Void contracts are unenforceable from the beginning. (correct)
- Void contracts are always illegal.
- Void contracts can be affirmed by the aggrieved party.
Which of the following statements is incorrect?
Which of the following statements is incorrect?
When is a voidable contract valid?
When is a voidable contract valid?
What is defined as 'an agreement enforceable by law' in the Indian Contract Act, 1872?
What is defined as 'an agreement enforceable by law' in the Indian Contract Act, 1872?
Which of the following elements is NOT essential for a valid contract?
Which of the following elements is NOT essential for a valid contract?
What must be present in order for an acceptance to form part of a valid contract?
What must be present in order for an acceptance to form part of a valid contract?
Who is NOT considered competent to enter into a contract?
Who is NOT considered competent to enter into a contract?
What is meant by 'lawful consideration' in the context of a valid contract?
What is meant by 'lawful consideration' in the context of a valid contract?
What is a characteristic of 'free consent' in contract formation?
What is a characteristic of 'free consent' in contract formation?
Which kind of agreements is often considered lacking in intention to create legal relations?
Which kind of agreements is often considered lacking in intention to create legal relations?
Which of the following would NOT constitute a lawful object of a contract?
Which of the following would NOT constitute a lawful object of a contract?
What makes an agreement unlawful according to Section 23?
What makes an agreement unlawful according to Section 23?
Which of the following is a criterion for a contract to be deemed void under Section 29?
Which of the following is a criterion for a contract to be deemed void under Section 29?
Which section states that agreements to perform something impossible are void?
Which section states that agreements to perform something impossible are void?
What is the primary characteristic of a voidable contract under Section 2(i)?
What is the primary characteristic of a voidable contract under Section 2(i)?
What is true of a void contract?
What is true of a void contract?
Which of the following would classify as a void contract?
Which of the following would classify as a void contract?
Which scenario could render a contract voidable?
Which scenario could render a contract voidable?
What must be ensured for a contract to be legally enforceable under the Indian Contract Act?
What must be ensured for a contract to be legally enforceable under the Indian Contract Act?
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Study Notes
Essentials of a Valid Contract
- A contract is an agreement enforceable by law, as defined by Section 2(h) of the Indian Contract Act, 1872.
- To be valid, an agreement must meet several essential elements:
- Offer and Acceptance: A lawful offer must be made by one party and accepted by the other. Both parties must intend to create legal obligations. Acceptance must match the offer, not altering any terms.
- Intention to Create Legal Relations: The parties must intend to enter into a legally binding agreement. This is not usually present in social or domestic agreements.
- Lawful Consideration: Something of value exchanged between parties, as defined by Section 2(d). It must be lawful, real, and not illusory.
- Capacity of Parties to Contract: Parties must be competent, according to Section 11. This means being of the age of majority, of sound mind, and not disqualified by law. Minors and those of unsound mind can't enter valid contracts.
- Free Consent: Consent must be free from coercion, undue influence, fraud, misrepresentation, or mistake. Consent means all parties agree on the same thing, defined by Section 13. If any of these factors are present, the contract becomes voidable.
- Lawful Object: The contract's purpose must be lawful. Section 23 states objects or considerations forbidden by law, or against its provisions, or that are fraudulent or immoral are unlawful.
- Certainty of Terms: The contract's terms must be clear, not vague. Section 29 states agreements with unclear meanings are void.
- Possibility of Performance: The contract must be capable of being performed. Agreements to do the impossible are void, stated in Section 56.
- Not Expressly Declared Void: The agreement must not be declared void by law. Examples include agreements in restraint of trade, marriage, or legal proceedings.
Differentiating Void, Voidable, and Illegal Contracts
- There are three classifications for contracts in the Indian Contract Act:
- Void: An agreement not enforceable by law, defined by Section 2(g). A valid contract can become void due to changes in circumstances or legal requirements.
- Examples: Contracts made without consideration, contracts formed under mutual mistakes, contracts involving impossible tasks.
- Key Point: No legal obligations are created by a void contract, and neither party can enforce it in court.
- Voidable: A contract enforceable by law at the option of one party, but not the other, as stated in Section 2(i). This occurs when consent is impaired.
- Examples: Contracts coerced, contracts with misrepresentation, contracts with undue influence.
- Key Point: The harmed party can choose to affirm (continue the contract) or reject (make it void). If affirmed, it's enforceable; if rejected, it becomes void.
- Illegal: Contracts with unlawful object or consideration. Section 23 states this makes them void from the start.
- Examples: Contracts for criminal activity, contracts to defraud the government, contracts that are immoral.
- Key Point: All illegal contracts are void, but not all void contracts are illegal. All agreements connected to an illegal contract are also void.
- Void: An agreement not enforceable by law, defined by Section 2(g). A valid contract can become void due to changes in circumstances or legal requirements.
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