PROFFESIONAL PRACTICE: ASSIGNMENT 2

Juliya Joseph
Roll No: 20

1. What is a Contract?

A contract is essentially a legal document that binds two or more parties together in an
agreement. The parties involved in the contract can be individuals, organizations, companies,
or governments, and they agree to do or refrain from doing certain things. The terms of the
contract specify the obligations of the parties involved, and failure to meet those obligations
may result in legal consequences. Contracts are used to formalize business transactions,
construction projects, service agreements, and more.

Key Elements of a Valid Contract:

• Offer: One party proposes a deal or terms.

• Acceptance: The other party agrees to those terms.
• Consideration: Something of value is exchanged between the parties, such as money,
goods, services, or promises.
• Intention to Create Legal Relations: Both parties must intend for their agreement to
be legally enforceable.
• Legal Capacity: Parties must have the ability to understand the contract (e.g., be of
legal age and sound mind).
• Legality: The contract’s terms and objectives must be legal (no contract for illegal
acts can be enforced).

2. General Principles of a Contract

These principles form the backbone of contract law and ensure fairness, clarity, and
enforceability in agreements:

a. Offer and Acceptance

• An offer is the starting point of a contract. It must be clearly communicated and must
express the intent to be bound once accepted.
• Acceptance must be unequivocal (i.e., it cannot be conditional) and can be made
through communication (oral or written) or by conduct.

b. Consideration

• Consideration refers to the benefit or value exchanged between the contracting

parties. For example, one party may provide services, and the other party pays for
those services. In common law systems, consideration is an essential element for a
contract to be legally binding.

c. Capacity

• Certain individuals or entities cannot enter into contracts, such as minors, people with
mental impairments, or intoxicated individuals. Contracts with such individuals may
be voidable if capacity issues exist.
d. Legality

• The contract’s subject matter must be lawful. For instance, a contract for illegal
activities (such as drug trafficking) would be void and unenforceable.

e. Consent

• The parties must enter the contract freely, without coercion, fraud, or undue influence.
If consent is not genuinely given, the contract can be voided or rescinded.

3. Types of Contracts

Here are various types of contracts you may encounter, each serving different purposes:

a. Bilateral Contracts

• These are the most common form of contracts, where both parties make mutual
promises. For example, in a purchase agreement, one party agrees to deliver goods,
and the other party agrees to pay for them.

b. Unilateral Contracts

• In this type of contract, one party makes a promise in exchange for a specific action.
The contract is formed when the other party completes the requested action. For
instance, a reward contract (e.g., "I will pay $100 if you find my lost dog") is
unilateral.

c. Express Contracts

• The terms of the contract are clearly stated, either in writing or orally, with specific
obligations and duties outlined.

d. Implied Contracts

• These are contracts that are inferred from actions, conduct, or circumstances. For
example, if you go to a restaurant and order food, it is implied that you will pay for
the meal, even if there is no explicit agreement to do so.

e. Void and Voidable Contracts

• A void contract is unenforceable from the outset, often because it involves illegal
terms.
• A voidable contract is one where one or more parties can choose to cancel or enforce
it (e.g., contracts signed under duress or with minors).

f. Executed and Executory Contracts

• Executed contracts are fully completed—both parties have fulfilled their obligations.
• Executory contracts have obligations yet to be performed.

4. Contract Documents and Drawings

In construction, engineering, or architecture, contracts are often supplemented by various
documents and drawings to ensure clarity. These documents provide detailed information
about the project:

a. Contract Document

• The contract document itself is a formal written agreement between the client and
the contractor. It outlines the project, deadlines, cost, scope of work, and other
important details.

b. Specifications

• Specifications are a detailed description of the quality of work, materials,

workmanship, and finishes required for the project. They form part of the contract and
help ensure the contractor adheres to certain quality and performance standards.

c. Drawings

• Construction drawings or architectural blueprints visually represent the layout and

dimensions of the project. These drawings typically include floor plans, structural
details, plumbing, electrical, and more.

d. Bill of Quantities (BOQ)

• The BOQ provides a detailed list of all the materials, labor, and services required for
the project, including cost estimates for each. It helps ensure transparency in pricing
and forms the basis for evaluating tenders or bids.

e. Site Plans

• A site plan is a detailed drawing that shows the layout of the construction site. It
includes the positioning of buildings, landscaping, access roads, drainage systems,
etc.

f. Addenda

• Addenda refer to any amendments or changes made to the original contract

documents during the course of the project. These are typically issued when new
information comes to light, or when unforeseen conditions arise.

5. Duties and Liabilities of a Contractor

a. Duty to Complete Work

• The contractor is bound to complete the work as specified in the contract, including
timelines, budgets, and standards. Failure to complete the work can result in penalties,
liquidated damages, or breach of contract claims.

b. Adherence to Specifications

• Contractors are obligated to follow the detailed specifications provided in the

contract, including the use of specified materials and construction methods.
c. Ensuring Quality of Work

• Contractors are responsible for the quality of their work. The work must meet industry
standards and the requirements laid out in the contract documents. Any substandard
work may result in claims for compensation or rectification.

d. Compliance with Laws and Regulations

• Contractors are required to follow all relevant laws, including zoning laws,
environmental regulations, building codes, health and safety regulations, and labor
laws. Failure to comply can lead to fines, legal action, or suspension of the project.

e. Duty to Cooperate

• Contractors must maintain effective communication and coordination with the client,
subcontractors, suppliers, and project managers. They must ensure that work proceeds
smoothly and according to schedule.

f. Liability for Defects

• Contractors are liable for any defects in their work or materials provided. If defects
are found within a certain period (usually covered by a warranty or guarantee period),
the contractor is responsible for rectifying the problem at their own cost.

g. Insurance and Risk Management

• Contractors are typically required to have insurance that covers liability, property
damage, worker's compensation, and other risks associated with construction work.
This protects both the contractor and the client from potential legal or financial
liabilities.

h. Site Safety

• Contractors must maintain a safe work environment, adhering to all relevant safety
regulations. If a worker or third party is injured due to unsafe conditions, the
contractor may be held liable.

i. Financial Liabilities

• Contractors may be financially responsible for delays, cost overruns, or breach of

contract. Penalties and liquidated damages can apply if work is not completed within
the agreed timeframe or if the quality of work falls below standards.