Contract – Meaning and Definition
A contract is an agreement (whether written or not) between two or more persons to do certain things or to not to do certain things for some consideration and it is enforceable by law. Modern contracts are generally written for the reason that in case of the non performance by any party it can be enforced in the court of law safely though oral contracts are also enforceable under law.
Contracts have become part of most of the transactions now a days, it starts from you opening a bank account or accessing some website or getting a house or a job or entering into any business arrangement.
Basic benefits of written contracts
A written contract entered before performing the agreed terms ensures that :
• The role of each party is made clear before hand
• The consideration as agreed by the parties to the contract is clearly stated
• Critical terms are interpreted with clarity not leaving any scope for confusion later
What constitutes a Contract
A contract requires that following to be present to make it valid:
• The contract must be legal as far as the subject matter is concerned
• There has to be an exchange of valid consideration on both the sides as one sided consideration wouldn’t make it a valid contract
• There must be agreement amongst the parties to the contract
• The parties to the contract must by competent. A Minor cannot be a party to the contract
• Contract must not be to do impossible things or something that is illegal in the laws of the country
• The contract must be definite in terms of time for performance. It cannot be for indefinite period
• The contract must specify the responsibilities and obligations of each party and also the liability in case of failure to perform the same.
• Contract to be valid must be consented by both the parties. It can be a written consent i.e in writing or implied consent where they act with some understanding.
• Every contract should carry a termination clause as no contract can be for indefinite period
Apart from the clauses relating to the above, the written contracts contains clauses relating to Indemnity where the parties need to indemnify for non performance, a force major clause where the contract gets terminated for reasons beyond their contract such as natural calamity etc. It also carries a clause for non disclosure of the information shared as part of the contract which might be critical for the business – Loans Near Me