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    Thursday, 20 November 2014

    Express and Implied Contract

    Express and Implied Contract

    An agreement enforceable by law is a contract; Section 2 (h)

    (a) Definition
    To constitute an agreement, it was necessary that there was an unconditional offer and sale was accepted by competent person or authority giving rise to accrual of rights to parties to such agreement. Where a tenderer made an offer to purchase certain property and attached conditions thereto, an agreement could not come into effect unless conditions were also accepted by Authority issuing tenders, Offer of tenderer having not been excepted by Authority, no right had accrued to such tenderer on basis of his conditional offer.

    (b) Oral
    A contract can be entered into orally or in writing. Oral agreement would be valid and enforceable as a written agreement provided it fulfilled all the requirements of a valid contract. Oral agreement however, requires for proof clearest and most satisfactory evidence. From the respondent had not signed any of the documents or no document was duly signed by both parties, it cannot be inferred that no valid agreement existed.

    (c) Parties necessary for contract
    Since a contract can only be bilateral and the same cannot be party on both sides, there can hardly be a contract between a on the one side a and b on the other side, particularly in a contract of employment.

    (d) Contract between more than two parties
    A contract may be made by more than two parties.

    (e) Agreement to contract is not a contract
    Where the parties agree to enter into a contract such an agreement is not a contract in law at all. An agreement to sell per se does not create title in property. Such agreement only creates a right to obtain another document. No registration of it is requited even though it contains acknowledgment of receipt of earnest money or party payment of price.

    (f) Not enforceable agreement
    Contract implies free and conscious agreement between two parties with regard to their rights and liabilities arising out of a particular transaction. Contract binds both the parties and such contracts are subject to the law of the land.

    (g) Promise without consideration
    A promise without consideration is unenforceable in a Court of law and cannot amount to a contract between the parties.

    (h) Cancellation or alteration of contract
    A party to a contract is not entitled in law to cancel a concluded contract unilaterally. Having entered into an agreement, it is not open to the defendant to resale from the same on untenable grounds as he pleases. Therefore, such a cancellation has no effect in law.

    (2) Promises, express and implied
    In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied. Section 9.

    Offer or proposal, in itself is not a ‘promise’ but would become a “promise” only when it is accepted. “Promise” in itself could be equivalent of an agreement whereas agreement enforceable by law is a contract. A contract may be either express or implied. It may also be of mixed character that is partly express and partly implied. The question whether a contract is express or implied is one, the inference of which is to be drawn from the attending facts.

    Express contracts
    An “express contract” means the reciprocal promises contained in the words of the contract or resulting from a true construction of them and excludes stipulations, which may arise out of any usage or custom or which be inferred from the conduct or course of dealings between the parties.

    Implied contract
    A promise which is excluded by the express terms of the contract cannot be implied into it. A term may be “implied in a contract to repair an intrinsic failure of expression. It is obvious that few contracts exhaustively deal with all possible future contingencies, and that in a given case certain important or even fundamental contingencies may have been overlooked which, if the parties had thought of them at the time of making the contract, would have been certainly provided for. Thus a covenant to repay is implied in every transaction of loan.

    Contingent payment
    A person accepting money for appropriation upon a certain contingency is under an implied promise to refund the same if the contingency does not arise and there is no appropriation of the amount.

    Mercantile or local usage
    Promises which have not been made either expressly or impliedly by the offeree can be imported into transaction under trade, mercantile or local usage wherever such usage can be invoked.

    Inference from practice of parties
    An implied contract may be inferred from the conduct of the parties or a long practice in their dealings. Where the course of dealings between A and B shows that A to whom B was dispatching goods on account sale was debiting B with losses arising not only on the consignments of his own goods but also on the consignments of goods which belonged to his constituent and that B without demur sent more goods in discharge of that liability; it was held that these circumstances gave rise to the inference that B had undertaken a personal liability for the losses incurred on the constituent consignments also.

    Conduct of Parties
    Where the contract between the gas supply company and the consumer envisaged an increase in price in certain circumstances after negotiations. But on receiving intimation of increase in the price of gas, even before this supply had commenced the plaintiffs kept silent for almost two years, during which period they received and paid bills at the revised price. In these circumstances the doctrine of acceptance by silence would certainly appear to be applicable. Therefore they could not challenge the increase after that period.

    Sale of immovable property
    As a general rule, in the case of immovable properties price is of the essence of a contract of sale and unless the price is fixed there is no enforceable contract, because if no price is named the law does not imply, as in case of a sale of goods, contract on a reasonable price.

    Contract for work
    Where ever a contract for work is found to be invalid it is always assumed, unless to express contract excludes it, that there is an implied contract to pay the person, who has to do the work, a reasonable amount for the work done by him.

    Principal and agent
    In cases where the relationship of principal and agent subsists and agent’s claim for extra remuneration on implied contract is enforceable.

    Term inconsistent with intention of parties
    No obligation can be implied in a contract inconsistently with its expressed terms. A promise which is excluded by the express term on the contract cannot be implied into it.

    Extent of Government contracts
    It is not competent to the Government to contract so as to fetter its freedom of future executive action which it must have, to protect the welfare of the state and no contract which would have such an effect can be implied against it.

    Photo credit: www.minkenemploymentlawyers.com 

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    Item Reviewed: Express and Implied Contract Rating: 5 Reviewed By: Usman Ali
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