Contract Law: Offer, Acceptance, and Validity (Muluki Civil Code 2074)
Exam Snapshot
Contract law in Nepal is governed by Part 5 of the Muluki Civil Code 2074 (Sections 513–649). A valid contract requires a clear offer, unqualified acceptance, lawful object, free consent, and competent parties.
Core Concept
- Offer (Proposal): One person signifies to another their willingness to do or abstain from doing something, with a view to obtaining the assent of that other person.
- Acceptance: When the person to whom the proposal is made signifies their assent thereto, the proposal is said to be accepted.
- Competence: Parties must be 18 years of age (age of majority), of sound mind, and not disqualified by law to contract.
- Free Consent: Consent must be free from coercion, undue influence, fraud, misrepresentation, or mistake.
- Void Contract: An agreement not enforceable by law from the very beginning (ab initio).
- Voidable Contract: An agreement which is enforceable by law at the option of one or more parties, but not at the option of the other(s).
Nepal Law Anchors
- Muluki Civil Code 2074: Part 5 (Sections 513 to 649).
- Sections 513-515: Definition and formation of contracts.
- Section 520: Capacity (Competence) of parties.
- Sections 526-530: Vitiating factors (Coercion, Undue Influence, Fraud, etc.).
Confusable Terms
| Term | Void (बदर) | Voidable (बदरयोग्य) |
|---|---|---|
| Enforceability | Never enforceable by law. | Enforceable until set aside. |
| Origin | Lacks essential legal elements ab initio. | Valid initially but challenged later. |
| Remedy | No legal standing/relief. | Aggrieved party can rescind. |
MCQ Traps
- Minor's Contract: A contract with a minor is void (not voidable) in Nepal. Many students confuse this with agency laws.
- Invitation to Treat: Do not mistake an 'invitation to offer' (e.g., price tags, tenders) for an 'offer'. An offer requires intent to be bound.
- Illegal vs Void: Not all void contracts are illegal, but all illegal contracts are void.
Example
If A forces B to sign a land sale agreement using physical threats, this contract is voidable at the option of B because consent was not free (Coercion). If A enters into an agreement with a person declared insane by a court, the contract is void.
Memory Hook
Remember 'O-A-C-C': Offer, Acceptance, Capacity, Consent are the four pillars of a valid contract.
Quick Revision
- Contracts must involve two or more competent parties.
- Silence does not amount to acceptance (unless specified).
- Coercion, fraud, and misrepresentation make a contract voidable.
- Contracts for illegal acts are void.
- A contract must have a lawful consideration to be valid.