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Contract
Law
In
Maldives, the law of contracts is contained in the “Contract Law” (No.
4 of 91).
“Contract”
is referred to a formal agreement entered into between one or more parties
and as such, it should be legally valid or acceptable by law (section
2).
Acceptance
“Executors”
of a contract (i.e., acceptors) should show their willingness to the contents,
without being forced. Executors should also be acceptable by law, i.e.,
they should be persons over 16 years of age and of sound state of mind
(section 3).
Format
and formation
Format
of a contract need not be of a particular pattern, unless otherwise specified
by law (section 4). “Submission” (offer) should be followed by acceptance.
Then it becomes a contract in law (section 5).
Offer
The
submission (offer) should not be confusing or uncertain and sould form
into a concrete idea so as to bind legally. An invitation to offer should
not be treated as an offer.
An
offer can be made to a particular person (or persons) or generally to
all (section 6).
Acceptance
and revocation of offer
When
the offer is understood by whom it is to be accepted, then it is completed.
Before acceptance, the offer can be cancelled. But it will be treated
as cancelled, only when the party to whom it was made is made aware of
the cancellation [section 7(a), (b), (c)].
Irrevocability
Where
validity of an offer is specified, then, until such time the validity
is expired, it cannot be withdrawn [section 7(d)].
[It
should be noted that this is a departure from the common law rule and
seems to have been suggested by the U.N. Convention on Sale of Goods.]
Acceptance
Acceptance
of an offer can be conveyed specifically, or by conduct [section 8(a)].
For
acceptance of an offer, no condition should be imposed [section 8(b)].
If
the offer is to be accepted in a specified manner, acceptance should be
conveyed in that particular manner; otherwise, acceptance should be conveyed
in the generally practised manner [section 8(c)].
Completion
of acceptance
“On
confirmation of acceptance of the submission, acceptance thereof is completed”
(section 9).
[Probably, “confirmation” here means communication.]
Offer
beyond acceptance
A
offer is beyond acceptance in the following cases:–
(i)
where a specific time limit is given to convey acceptance and lapse occurs
prior to acceptance ;
(ii)
where a condition is imposed for acceptance, and the same is fulfilled
before acceptance of the offer or occurrences of similar nature ;
(iii)
withdrawal of the offer on legal grounds ;
(iv)
non-acceptance of the offer (section 10) ;
Change
of circumstances
An
interesting provision in the Maldives Act deals with change of circumstances,
as under:
(a)
the contract will become void, when the circumstances on which the contract
is based change, whether within or without the reach of the contractors
;
(b)
change of circumstances, mentioned in (a) above, refers to “changing of
an important portion of the contract” [section 11(a) and (b)].
The
word “portion” here seems to refer to, an aspect or component of a contract.
This
provision seems to go beyond the common law. At common law an event within
the control of a contracting party does not terminate the contract.
It
may also be mentioned there is some overlap between section 11 and section
22.
Ignorance
of law
Ignorance
of the laws in force is not a reason to nullify a contract [section 11(c)].
This
is an interesting provision, codifying a rule which already exists at
common law.
Consent
vitiated
A
contract made “forcibly on false grounds” or through threat or by using
undue influence is not a valid contract (section 12).
Threats
and force
If
a contract is “forcibly” entered into, it becomes an invalid contract.
“Threat”
here refers to (acts which) show intention of torturing or using influence
of any kind (sections 13 and 14).
Undue
influence
Undue
influence refers to using influence or position (section 15).
False
grounds
Something
which is obviously unreal (but) deceitfully shown real, means false grounds
(section 16).
Illegality
In
the following circumstances, a contract becomes unlawful:–
(i)
contracts prohibited by law ;
(ii)
contract to achieve illegal objectives ;
(iii)
a contract specifying illegal acts to be acted upon (i.e., a contract
whose object is unlawful) (section 17).
Restraint
of trade
Where
a clause of a contract prohibits refrain from carrying out of a person’s
occupation or urging a person to indulge in prohibited activities, that
particular clause will be treated invalid, unless otherwise specified
activity is proved to be reasonable. [section 18(a)].
The
section has been quoted above as contained in the (unofficial) transaction
of the Maldives Act.
Legal
proceedings
Where
a clause prohibits legal action, that particular clause is invalid.
If
arbitration is allowed by any clause, that particular clause is valid
[section 18(b)(c)].
Implementing
international law
In
case of any dispute arising out of any clause in the contract, if implementation
of international law is allowed, that particular clause is valid [section
18(d)].
Completion
of a contract
In
following circumstances a contract may be treated as completed:–
(i)
contractors fulfilling their obligations, as per contract ;
(ii)
contractors agreeing that the particular contract is acted upon ;
(iii)
due to legal or unforeseen constraints, it becomes absolutely obligatory
on the part of the contractors to wind up the contract (section 19).
This
section seems to provide for release, novation, accord, etc.
Adherence
to the contract: (performance)
Unless
otherwise deviated, a contract should be adhered to strictly as per laid
down in the contract” [section 20(a)].
A
contract can be carried out by the contracted parties or their nominees
or Attorneys. However, if the contract strictly requires the contractor
to fulfil his/her obligations, it is absolutely necessary on the part
of her/him to do so (personally).
Unless
otherwise specified, the contract should be acted upon within a reasonable
period.
Where
a condition is imposed to act upon, then, unless the condition is fulfilled
it not obligatory to act upon the contract (section 20).
This
section seems to refer to contingent contracts.
Mutual
agreement
Obligations
under a contract can be fulfilled as per mutual agreement of all contractors
agreement.
Such
agreements should be within the legal framework (section 21).
Impossibility
or illegality
It
will be treated as the contract is acted upon (discharged) if adherence
thereto becomes impossible due to legal constraints or otherwise.
If
it becomes “difficult” or expensive to adhere to the contract it will
be treated as difficulty to adhere to the contract.
But
a difficult situation arising out of negligence of the contractors will
not be treated as difficulty to adhere the contract.
Claims
under a contract may be lodged before contracted party becomes aware of
difficulty in continuation of the contract. After the situation arises,
the contractor will not be binding to pay back such claims (section 22).
It
should be pointed out that this section 22 overlaps section 11.
Compensation
for breach etc:–
(a)
The contractor who “does a detrimental act” will have to pay reasonable
compensation.
(b)
Detrimental acts, as per (a) above, for which compensation is payable,
are:
(i)
Direct losses by violating the contract.
(ii)
Losses “that may be aware of by the contractors, by violating the contract.”
[The
idea seems to be to cover contemplated losses].
(c)
For losses that may be arising out of inadequate security measures no
compensation is payable (sections 23-24).
Specific
performance
A
contractor suffering losses due to detrimental acts can request the court
to order the other party to act upon in a particular manner, in case compensation
paid is considered to be insufficient to cover the losses.
Courts
can issue such orders that the defendant should act upon in a “particular
manner”, in case the court feels the compensation given is insufficient.
“Particular
manner” herein refers to such acts that may be laid down in the agreement
that can be enforced by the court (section 25).
This
simple provision is intended to deal with the whole law of specific performance.
Joint
and several responsibility of the contractors
Unless
specified in the contract, liabilities arising out of the contract by
more than one person, can be a responsibility of all contractors or individual
contractors (section 26).
Enforcement
and practising of regulations
President
of Maldives has the authority to make regulations for enforcement and
practising of this law (section 27).
Definitions:–
(a)
Unless specified in law, “The President” refers to the President of Maldives.
(b)
Except in the case of section 3(b) (age and mental incapacity) this law
is common and includes companies and associations.
(c)
Any word used in singular form here, includes plural of the same. Like
wise, any word in plural form also includes its singular (section 28).
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