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Explain Indian Contract Act, 1872?

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In the securities markets, the SCRA governs the contracts for or relating to the purchase or sale of securities. However, the provisions of the Indian Contract Act, 1872 also have a bearing on these securities’ contracts as this is a general Act which governs the rights of parties in a contract and the effects thereof.

Following are some important terms/definitions used in the Indian Contract Act:

(i) Contract: According to section 2(h) of the Indian Contract Act, 1872, a contract is an agreement enforceable by law. Therefore, there has to be an agreement to create a contract and secondly, it has to satisfy certain requirements mentioned in section 10 of the Act, i.e., the agreement has to be between parties competent to contract, with their free consent, for a lawful object and with lawful consideration, and it should not have been expressly declared as void agreement. 

Standard Form Contracts: With an enormous increase in commercial transactions, the concept of Standard Form Contracts has come into existence.

(ii) Agency Contract: An agent is a person employed to do any act for another or to represent another in dealings with third persons, as per section 182 of the Indian Contract Act, 1872.

(iii) Sub-agent: A sub-agent is a person employed by, and acting under the control of, the original agent in the business of the agency. Though the general rule is against delegation of authority by an agent or the appointment of a sub-agent, there could be such an appointment in exceptional situations recognized by law.

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