Question

Answer all the follower questions (course business law):
*Remedy that cancels contract and restores parties to original positions?
*A contract that requires performance of a prohibited act by law is?
*Contract that may be affirmed or rejected (disaffirmed) at the option a party is called?
*Does a contract have to violate a statute to be considered illegal?
*Requirements of a partnership (what is not required of a partnership)?

Answer 1

1.Restitution is a remedy that cancels contract and restores parties to original position.Restitution in the contract means the process of restoration of a party who suffers damages to the position they before the formation of a contract

Example:X and Y enters into a contract terms of a contract :X hires Y as a professional architect to provide designs specifying that the designs are to be provided for office building and as well as Personal home also. X wrote a cheque to Y for entire fees hired by him. Y delivers the designs to X, explaining that there was a problem in the software used hence none of the home designs were included in it. Y offers to refund a part of the fees for which X refuses and demands the entire payment as it has ruined the entire plan

When the parties arbitrated for civil court, the decision tells that although it was no fault of his own Y didnot fulfill the terms of the contract and hence Y should refund partial fees to X to the extent of non-performance of a contract.

2. A contract which is prohibited by law is a void contract As per Indian Contract Act, 1972 Void contract has a legal definition that a contract entered for the purpose is commission of an illegal act, a contract is expressly void if it is prohibited by any law or if its performance is not possible without disobeyance of law,A contract which is unenforceable by law, for all the above cases determines contract as a void Contract

Examples of void contract is:

A contract that was between an illegal drug dealer and an illegal drug supplier to purchase a specified amount of drugs.Either of them can enforce a contract as it involves illegality hence it is a void contract

3.Contract that may be affirmed or rejected(disaffirmed) at the option of party is called as Voidable Contract

As per Indian Contract Act ,A contract which may appear to be valid and has all the necessary elements to be enforceable, but has some type of flaw which could cause one or both of the parties to void the contract. The contract is legally binding,but due to other reasons it becomes void, If there is any injured party involved, the injured party or the defrauded must take action, otherwise it is considered valid.

Example of Voidable contract is:

A contract entered with a minor is a voidable contract.

4. A statute is an Act proposed and prescribed by legislature that declares something,like a law. Violating such prescribed law is illegal Such contracts are called as void and unenforceable contracts so the contract which violates a statute to be considered as illegal contract

Examples are activities like prostitution, gambling selling of prohibited drugs or pharmaceuticals are illegal contracts.

5. Partnership means two or more parties entering into an agreement to conduct business activities which earns profitability.

The requirements of partnership are:

i. Agreement of a partnership : You have just observed that partnership must be the result of an agreement between two or more persons, You should note that it can arise only from a contract and not from status. That is why, a partnership is distinguishable from a HUF carrying a family business. Agreement can be an oral or written agreement,written agreement is more preferable terms of the agreement should be clearly mentioned relating to profit sharing ratio, retirement of partners appointment of partners, Capital ratio etc..

ii. Business carried on by all or any of them acting for all: Every partner is equally held responsible for the activities of the firm.

The above are mandatory to carry on a partnership

Registration is not required for partnership and partnership does'nt exceed the limit of members