Saturday, August 17, 2019

Contractual Obligations

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The vast majority of obligations take the form of contract between the parties, thus we will discuss formation of contract, what constitutes a contract obligation and what does not.

Formation of a contrast :

The contract is the final outcome of an offer and acceptance, it may be preceded by various negotiations, but there is no real contract unless there is total agreement between the offer and acceptance and unless every party complies with all the terms of the contract proposed.
A contract creates rights & liabilities. It may even be considered a form of property, in that the rights & Liabilities resulting from a contract can sometimes be transferred to third persons and may pass involuntarily as a matter of law on the death or bankruptcy of the party concemed.
Contracts may also give rise to obligations of trust as for ex-duties of an excutor on payment certain fees & expenses or where one person agreco to act as the agent of another.
A contract may produce consequences so far as the laws of tort is concerned, since to procure a breach of contract (and possibly in modern times to interfere with its proper performance or even to
prevent its being made). Is an actionable wrong. 30 Thus the concept of contract is central in modern
law & the law of contract has very close ve relationships with other branches of law. 

A contract as stated before is the final outcome of total agreement between offer and acceptance, here we discuss what forms an offer and what constitutes an acceptance.
Offer defined "an offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it "An offer to be capable of acceptance, must involve a definite promise by the offerer that he will bind himself if the exact terms specified by him are accepted. If an offer takes the form of a promise in return for an act the performance of the act in itself is an adequate indication of assent.

Acceptance :

Acceptance of an offer consists of a declaration communicated by any means whatever it may be to the offerer. noy Acceptance may also consist of the dispatch of the goods or of the price or of any other act which
the may be considered to be equivalent to declaration referred to either by virtue of the offer or as a result of practices which the parties have established between themselves or usage.
When does and acceptance operate to form a contract? the basic rule is that the contract is formed by dispatch. The offerer may be allowed the right to condition his offer. In particular he may provide that the contract becomes effective only upon the double condition that the acceptance be communicates to him and that he has not revoked the offer in the meantime. This condition may be imposed upon the acceptor either by virute of the offer or as a term of the conditional contract which is being created by dispatch of the acceptance. the absence of a stepulation to the contrary, contract whether inter presents or inter absents, is fouund at the time and at the place of the dispatch of the acceptance. When the offer is accepted tacitly, the contract is considered formed at the time and place where the acceptor received the offer.


A promise not made by deed is not enforceable by action unless it is made for valuable consideration.
If by deed promises to give $50 may enforce the promise. If by word of mouth or in writing. A promises to give $ 20 cannot enforce the promise. It is not and enforceable contract but a gratutitous promise. But suppose A offers to pay B $ if B will in return deliver to A a certain horse, then if B accepts the offer and delivers the horse A. is under a contractual obligation to pay: over $50 in return. The delivery of the horse is said to be the consideration for A's promise.
Consideration must be something of value which the promisee contributes to the bargain, so as to bind the promisor to his promise. It is not sufficient that the promisor is under some moral obligation to the promise and that his promise is to fulfill that obligation.
Nature of consideration :
A valuable consideration may consist either in some rights, interest, profit or benefit accruing to the one party.or in some forbearance, detriment, loss of responsibility given, suffered or undertaken by the other.
Contracts void & voidable :
A contract though valid may be annulled at the instance of a parity who gives consent to it. On the ground of want of capacity. If he gives it in mistake provided that the error was of the kind described here. If he was induced to consent by deceit by the other party or to which such party was privy. If he was coerced into the contact by duress or violence Mistake, dureas or fraud are commonly spoken of as the vices of consent. It is likewise true that a party to a contract cannot get it annulled on the ground of his fraud or violence. In an Egyptian case, a wanted to borrow money from B. B. said he would lend it only on condition that A signed a deea to a certain effect. A pretended to sign, but instead of writing his name he wrote in Hebrew letters which B could not read words equivalent to
declares he does not accept . It was held that A was found in spite of his fraud. Yet the fact that the obligation of one party is annulled on the ground that he did not give a valid consent does not affect his validity on the obligations of the other party.
Acts voidable are valid at first and produce legal effects, but are liable to be challenged and annulled.

Characteristics of void contracts

 1. It can never produce any legal effect.. Thus when
its validity is inquired into by a court, the court deoes not annul it, but simply declines to recognize its existence.
2. Any person having an interest may claim that the void contract produces no effect.
3. No confirmation by the parties can gave validity to it
4. It cannot acquire validity by prescription.
Characteristics of viodable contracts:
1. Those made by an incapable person, unless his incapacity was absolute as in the case of a lunatic or a baby.
2. Those made by an incapable person, whose
consent was given in mistake, was induced by fraud or was the effect of duress . The party protected has a right to ask that it should be annulled under these rules.
3. The contract is perfectly valid to begin with &
produces its legal effects.
4. The action to have it annulled is competent only
to the party protected.
5. If the person who has the right to attack the
cotract confirms it. It produces its effect.

6. If the challenge is not made within a certain
period the fight to challenge is lost by prescription 10 years in the French code, but
according to general rules in Egyptian 15 years. 7. If the contract is annulled the parties are put
back to the same position as if the contract had never been made. This rule is subject to two
qualification in Egypt & France: a. When it is an incapable person who gets the contract set aside for his incapacity, he is liable only to account for so much as to have insured to his benefit in consequence to the performance
of the contract..
b. The person who has received a thing under the tol contract and possessed it in good faith does not need to account for the fruits.
Minors contracts :
The law governing infants contracts is based on two principles. The first and more important is that the law must protect infants against their inexperience. This makes it necessary to invalidate contracts which are unfair to the infant or though in themselves fair are simply improvident e.g. (if the infant for a fair price buys something that he cannot afford).
The second principle is that the law should not cause unnecessary hardships to adults who deal fairly with infants. Under this principle certain contracts with infants are valid others are voidable in the sense that they bind the infant unless he repudiates & an infant may be under some liability in tort , quasi-contract and if guilty of fraud in equity
At common law a person who spends money in luying necessaries for an necessaries for an infant is entitled to recover it form the infant. One who lends money to an infant cannot recover it at law, but can in equity recover such part of the loan as was actually used by the infant to discharge his liability for necessaries supplied to him. A mortgage under seal to repay such a loan is ineffective since the infant is not bound by his dead.
Performances are to be exchanged under an exchange of promise if each promise is at least part of the consideration for the other and the performance of the other comment.

Ordinarily when parties make such an agreement, they not only regard the promises themselves as the subject of an exchange, but they also intend that the performance of those promises shall subsequently be exchanged for each other.

Performances need not be simultaneous. It is often expected that performances will be exchanged under an exchange of promises were though these performances are not to take place at the same time. Under a contract for the sale of goods. e.g the parties expect an exchange of the delivery of the goods by the seller & the payment of the price by the buyer regardless of whether the price is payable before, at the same time as or after delivery of the goods.

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