TERMINATION AGREEMENT, CONTRACT LAW, AND ITS APPLICATION ON BUSINESS TRANSACTIONS

A B S T R A C T-

One of the prime reasons for a business to work without the high tides is to get its hands laid on the Agreement and Contracts. Even the normal sale of goods and services believes that a variety of business transactions work on the basis of trust, but when things start wandering on the path of ambiguity, then it becomes necessary to form a precise Agreement/ Contract between the parties so as to avoid the later regret. On account of the fact that a Contract is contemplated as an Agreement between the assenting parties executable by the law. In this research paper, an effort has been made to endeavor the Idea of dissolution of agreements and a solicitation of Contract Law on Businesses with their enforceability under the capitalist world. This study will also throw some light on the verbal and non-verbal agreements/ contracts and their feasibility. This characterization of the contract law has been made for determining its importance and its application in the business world.

Keywords- Agreement, Contracts, Business Transactions, Verbal and Non-Verbal Agreement



I N T R O D U C T I O N-

In pursuit of the increasing economic and commercial transactions, Agreements and the Breach of Agreement is something that has caught the attention of the legislature, Judiciary, and other business stakeholders.

Even in India in the post-1990s, where, Liberalising, Privatising and Globalising were taking place, the formation of Agreements and Contracts became like a booming industry. As for the rights and the duties of the parties are entirely dependent on the contracts, in the view of the fact, drafting became very important, also, the clauses which pertain to the breaching of agreement, because that’s where the Termination of Agreement comes into the picture.

If periodically, there is dissatisfaction between the consensual parties, as one of them is unable to fulfill his/her contractual duties which portray that the respective party is unable to attain its obligation effectively and efficiently. About which, termination of agreements come into the picture, which formally states that, with the consent of all the contractual parties, the contract is believed to cancel.

In the past 20 to 25 years, with the development in the Information Technology sector, everyone is pursuing almost everything online, adding to this, even the Agreements are happening online. However, the major concerns remain the same which was the dissolution of the Agreement.

For Example, If payment has been made by A to B through cheque and because of insufficient funds or any other endorsed reason the cheque gets bounced, then according to Section 138 under, The Negotiable Instrument Act, the defaulter can be punished with imprisonment and hence, the agreement or the contract is subjected to the termination.

Termination of Agreement include details as follows-

• The Contractual Parties

• Relationship between the parties

• The outcome of the Termination

• Any repercussions of the Termination



WAYS TO TERMINATE THE CONTRACT-


Breach of Contract-

When any of the two contractual parties deliberately does not fulfill the obligation of the contract this is known as breach of contract, and therefore, that contract or agreement is subjected to the termination.

Implausible Performance-

A contract essentially requires two or more parties to do something, which it refers to as performance. For Example, if a firm hires a freelance investigator to investigate certain cases, and when he/she agreed upon the contract and acts on it, that is termed as performance. On contrary, if the investigator unable to fulfills their obligations because he/she got injured or faces any other unforeseen complication which would hinder their accomplishment of the performance or the assigned task then that would be an impossibility of performance, and therefore, the firm has all right to terminate the contract/ Agreement.

Execution of a Contract-

A Contract is typically terminated when the consensual parties have consummated their obligations mentioned in the undertaking. Parties should have documents related to the completion of the contract in order to refrain from conflicts and disputes among themselves. Moreover, even the court of law requires documents regarding the fulfillment of the contract, in case any dispute takes place.

Revocation of the Contract-

Revocation of Contract takes place when a contract is terminated because of the fraudulent representation of an individual, and showcasing himself/herself to be competent to enter into the contract.

For Example, A minor fraudulently represent himself/herself as major and portrays that s/he is capable enough to enter into a contract with the respected party.

Owing to the fact that contracts with minors are void ab initio, therefore is subjected to revocation of that contract.

Termination by Preceding Contract-

This type of cancellation of the contract takes place if you or the other consensual party call for the termination because of some prior written agreements. For Such agreements or contracts, the other party must be given proper details apropos to the reasons which qualify the contract for termination. Moreover, the contract should also state the measures that should be taken by one of the parties to terminate the contract. Furthermore, in some cases, written documents must be submitted from one party to another in pursuit of terminating the contract.



ATTRIBUTES OF TERMINATION OF AGREEMENT-

Termination of an agreement is considered to be a sensitive practice. Therefore, to ensure the smooth functioning of this practice, the respective contractual party should try adhering to the fair route of the termination process and should be precise about the aspects of it to avoid misrepresentation and conflicts in the future.

The termination agreement should involve the names of the party and the reason for their dissolution of the agreement. The agreement also included the signing date, as well as the termination date of the contract.

Moreover, the notice of termination agreement is essential for the respective party to create a record and proof of the canceled agreement, which might be required, just in case the other party decline to accept that any kind of agreement took place in the future.


A SUCCESSFUL DATE ON A TERMINATION AGREEMENT

If parties have agreed to sign the contract, it does not mean that it gets in effect immediately. Albeit an agreement comes to an effect on a date specified by the parties, still, much of the things are dependent on the details of the agreement.



Sometimes the agreement gets activate by other means like,

Agent’s delivering the agreement


Hand Delivery


Subsequently, being mailed after a coordinated number of days

Nonetheless, contractual parties should set the termination agreement’s date following all the hindrances which might fall in the transit of the agreement, and to refrain from it they should postdate the agreement so that it falls on the same date which is specified by the consensual parties as advised by their legal advisors/advocates.

CONTRACT LAW-

Growth with the capitalist economy, world-wide, after world war II, a lot of commercial transactions started happening, which were pen down as contracts.

In obedience to, The Indian Contract Act, 1872, an agreement (offer+ acceptance) between consensual ad idem parties, which includes consideration (something in return) and a presumption of creating a legal relationship is assumed to be a Contract between them. A Contract is considered to be a contract, if the agreement between the two parties is enforceable by the law, on contrary, if it's not, then that agreement would be void ab initio.

A contract is considered to be an essential ingredient for the smooth functioning of business transactions. Contracts can be both basic as well as complex, and to break the wall of complexity in contracts, it is always advised to get in touch with the corporate lawyer. Notwithstanding, to understand the essence of the Contract, here are some basic elements which are required for the formation of a Contract-

• An Offer Agreement

• An Acceptance and a Promise

• The intention of creating a legal relationship

• And an applicable consideration which is acceptable by the law (Barter System is not a legal consideration)

Moreover, even after fulfilling the above-mentioned elements, certain contracts have been observed to be invalid contracts. Such as:

• Contract with minors or with the person who is incompetent to perform the contract.

• A contract that is aiming towards an illegal activity or crime.

• A contract which is against the law of the country.


To make an agreement and a contract valid, it requires certain necessities which are as follows:

• Free Consent

• Lawful Consideration

• Competent Parties

• Lawful Object

Therefore, under section 10 of the Contract Act, a contract is deemed to be valid, if it fulfills all the necessities mentioned above. A contract is a formal process that can be both written or oral based on the preferences of the party, with whom the contract has been made.


IS VERBAL AGREEMENT ADMISSIBLE IN COURT?

A contract is considered to be an agreement between the consensual parties. A verbal agreement is a contract between two parties on spoken communication. The outshining issue with oral agreements is that it is difficult to prove their existence and to prove the agreed terms. As the agreed party might be untruthful about the terms of the agreement.

A contractual agreement between two parties which is not in the written form is nothing but a word from one party to another. On which, written agreements are taken as more reliable, albeit, there are consequences attached to these agreements as well, but at the same time respective parties have proof of pre-requisite terms and conditions of the contract decided by both the parties.

Nonetheless, certain parties get into a verbal agreement with another party, so, now the question is, are verbal agreements admissible in court?

The answer to this question is “Yes” if an oral agreement fulfills certain conditions then it is certainly admissible in court.

“When an oral agreement is found to fulfill certain essentials, their admissibility the court cannot be questioned.”- Judicial Recognition.


While the set of elements which is mentioned below may not be necessary to form a valid verbal contract, still it is generally suggested to the parties that they should consider it, as it will be helpful to them in proving the existence of their agreement/contract:

• Preservation of any physical evidence which can corroborate with the oral contract, e.g., receipt, email, etc.

• During the formation of the verbal contract, it is better to have a witness present for future testimony purposes.

• Operation of the verbal contracts works effectively and efficiently when it has a tangible end result as its terms and conditions are related to buying and selling of some kind of commodity or services.


About which, under the case of Alka Bose vs. Parmatma Devi & Ors [CIVIL APPEAL NO(s). 6197 OF 2000], Supreme Court stated that sale agreements can be in oral form and they are certainly admissible in court, until and unless it is well within the court of law and ambit to section 10 in, The Indian Contract Act, 1872. In other words, it is not vital that an agreement should be in written form only, spoken communicated agreements are also acceptable by the court if they fulfill the essentials of section 10.

Acceptable by the Supreme Court of Justice, we consider Oral agreement enforceable under certain conditions, still it is always recommended by the professional to get into a written form of agreement as it gives more stability and a good steady in the functioning of the business transactions. Moreover, the document clarifies the intent and the idea of the consensual parties and helps to build a fiduciary and strong relationship between them.


C O N C L U S I O N-

Commencing a business and they aim to fulfill its requirements and goals can every so often turn out to be a tumultuous and neck-racking mission. By virtue of which, contracts can be expected to slip from the minds of the owner. As a matter of fact, an agreement is reviewed as a Contract between the consensual parties which is considered to be an essential requirement for running an unwrinkled business. It helps in creating well-scrutinized terms and conditions with the consent of the contractual parties and resolve the disputes among them if taken to the court of law under a particular jurisdiction.

However, there could be serious repercussions pertaining to the contracts, such as Breach of Contracts whether it being oral or written. Among the two types of Contracts, a written contract is mostly favored by the professionals as it helps in creating a better, trustworthy, and reliable relationship in commercial businesses. So as to avoid such circumstances, always be well informed about your do’s and don’ts before being bound by the legal obligation. Just in case any respective party is under an ambiguity relating to the contract or facing any difficulty in understanding the terms, language, or anything alike, then they should certainly, consult with any legal advisor or any Corporate Lawyer, as taking an inaccurate decision in the matter of contract may result to legal repercussion in the near future.


R E F E R E N C E S-


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