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LEGAL ASPECTS OF CONTRACTS PREPARED BY: Abhinav Jain 2K11/EN/01 Abhishek Pandey 2K11/EN/02 Aditya Singh Patel 2K11/EN/03 Ajay Singh 2K11/EN/04 Akash Jai Singh 2K11/EN/05 Aman Sokhal 2K11/EN/06 Ankush Das 2K11/EN/06
WHAT IS A CONTRACT ? INDIAN CONTRACT ACT, 1872 In India, all contracts are covered/governed by the Indian Contract Act, 1872
COMPONENTS OF A VALID CONTRACT
PARTIES TO A CONTRACT
LEGAL CAPACITY TO CONTRACT
AGREEMENT SHOULD NOT BE VOID OR VOIDABLE WHAT IS VOID AGREEMENT?
DISCHARGE OF CONTRACTS
ADVANTAGES CAN BE COST-EFFECTIVE The use of contract manufacturers means that the hiring firm does not need to purchase expensive manufacturing facilities, equipment, machinery, raw materials or hire specialized labor. This not only allows the hiring firm to focus solely on sales, advertising and marketing but also allows a firm that is comparatively more efficient at manufacturing to carry out the process. As a result, hiring firms often benefit from economies of scale and the purchasing power of large manufacturers. All of these factors lower production costs. ENCOURAGES CONSISTENCY Having a written agreement provides one set of procedures for everyone to follow. For example, if a group rotates its secretary and treasurer, each person might track money and keep records a little differently, which could create an administrative muddle. Providing the secretary and treasurer with written procedures will help prevent that problem
HELPS PREVENT AMNESIA Putting information and decisions on paper means keeping less of it in your head; there's a limit to how many details we can keep organized in our brains. Even with people whom you trust completely, you may have had the experience of remembering the same event or conversation differently. LEADS TO A WELL-THOUGHT-OUT PLAN Putting ideas in writing helps a group think through details that might not have been ironed out during discussions. Plans that seem really great over a glass of wine don't always make as much sense when you lay them out on paper.
DISADVANTAGES TIME AND MONEY Perhaps the main disadvantage to the use of contracts to reduce risk is that drawing up contracts takes both time and money. To construct an airtight contract, a company has to employ the services of a lawyer to draft the contracts, and lawyers are seldom inexpensive. In addition, focusing on contracts draws time away from other activities that could help grow the business. LITIGIOUS ATMOSPHERE Making every person who deals with an organization sign contracts that are designed to reduce the company's risk can create an atmosphere in which everyone has their hackles up. This may not only breed suspicion, but it can actually increase the likelihood of a lawsuit, as people forced to sign these contracts may seek the counsel of a lawyer they wouldn't otherwise approach.
BINDING CONTRACTS Once a contract is signed with a manufacturer, the hiring firm essentially calls all the shots. This can lead to serious problems for the reputation of the manufacturer if the wrong firm is partnered with. Consequently, through no fault of their own a manufacturer can be linked to an inferior product, possibly damaging their future business prospects. PRESSURE TO DELIVER Due to unforced delays, the parties are left with less time to perform the work. The pressure to deliver in less time reciprocates itself in the reduced quality of the work.
A FEW MORE IMPORTANT POINTS TO GIVE THE ESSENCE OF LEGAL ASPECTS.