CONTRACTSDefinition of contract purpose of contract scope of contract development of contract

DEFINITION OF CONTRACT

CONTRACT: any legally binding agreement voluntarily entered into by two or more parties that places an obligation on each party to do or not do something for one or more of the other parties and that gives each party the right to demand the performance of whatever is promised to them by the other parties.

Somali civil code did not define the term “contract” but instead indicated in the Art.88 what constitutes a contract as when parties mutually exchange each other offer and acceptance in a legally form as it may required by the law.

DEFINITION OF CONTRACT

Indian Contract Act, 1872 defines a contract as an agreement enforceable by law. where defines agreement as “every promise and every set of promises forming consideration for each other.” where promise in these words means: “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted, becomes a promise.”

CONTRACT LAW

it is difficult to give a definitive answer to either. But one may say contract law is most obviously the law relating to agreements or promises.

It is primarily concerned with agreements in which one party, or each party, gives an undertaking or promise to the other. It governs such questions as which agreements the law will enforce, what obligations are imposed by the agreement in question and what remedies are available if the obligations are not performed.

PURPOSES OF THE CONTRACT LAW

Contract law is primarily concerned with supporting institutions of exchange, which is an enormous part of our life carried on the basis of that are in some sense termed as agreement. Contract law has many purposes but the central one is to support and control the millions of agreements that collectively make up the market economy, and hence operates in the context of dispute resolution mechanism. Besides it empowers the parties to make agreements that the law will enforce. It also enables parties to the contract to make exchanges that might otherwise carry too great risk whether of disruption by some contingencies or default by the other party. Accordingly, contract law in this respect is the most important which creates smooth functioning of business transaction by creating certainty, predictability, and enforceability.

SCOPE OF CONTRACT LAW

The scope of contract law varies from country to country and from legal system to legal systems depending on the types of obligations they govern. Unlike non- contractual obligations in which a person undertakes an obligation not to wrong another by conduct that the law of tort establishes as wrongful.

contract law governs contractual obligations which arises from agreements made between two or more persons which puts the promisor under the obligation to perform his or her promises under the sanction of an action against him for breach of the contract.

HISTORICAL DEVELOPMENT OF CONTRACT LAW

The historical development of contract law can be understood in terms of the conceptual foundations of obligations, which was traced back to ancient and classical Roman law. However the foundation of the present day law of contract were laid in the 19th century. This period in history saw the rapid expansion of trade and industry inevitable resulting in the increments in the volume of commercial disputes as a result people turned to the court of law for solutions. Gradually, there developed a body of settled rules which reflected and of the disputes from which they arose and the prevailing belief of the time. However, this rules and belief are affected by the dominant economic philosophy, the so called the laissez-faire individualism-the view that the state should not meddle in the affairs of business and that individuals should be free to determine their own destines.

HISTORICAL DEVELOPMENT OF CONTRACT LAW

According to freedom of contract theory it is assumed that every one is free to choose which contracts they entered into and the terms on which they wish to do so. According to equality of bargaining power theory, the parties were deemed to have equal power to bargain on their business and deemed to be of equal bargaining strength.

These theoretical foundations of contract law produced an acceptable legal framework for the regulation of business transaction that resulted in the crystallization or codifications of contract laws across the world

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